Fonterra is closing its milk powder plant at its Brightwater site in April 2023.
Brightwater, near Nelson, is a small ageing plant that processes about 0.25 per cent of Fonterra's overall milk supply into whole milk powder.
The closure will result in the loss of 30 jobs.
The move meantmilk would be processed at Fonterra's Darfield site, which was in line with the co-op's long-term strategy, Fonterra chief operating officer Fraser Whineray said.
"We know milk supply is declining over time, flat at best, so we need to make sure we're getting the most out of every drop of milk and optimising our plants to match both consumer demand and available milk supply."
Part of Fonterra's long-term strategy was to direct more milk into its food service and consumer business, less into Ingredients, and in some cases, to divert product away from the Global Dairy Trade auction, Whineray said.
This, along with forecast capital and maintenance costs, meant the co-op had to make the "tough decision" to close the milk powder plant at Brightwater, he said.
Milk collection and associated activities will continue at Brightwater as Fonterra moves its milk transfer activities there from Tuamarina.
Whineray said the priority right now was to support the 30 employees affected by the closure of the milk powder plant.
"It's no doubt tough news for some of the Brightwater team and we'll be working with them in the coming months on their future options, including redeployment opportunities within the co-op."
Whineray said he was proud of the quality and skills the 30 team members had and was confident they would be able to secure new roles.
