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 meant milk 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."