Construction is about to start in Hamilton on the country's first independent facility for developing new milk powders.

The Waikato Innovation Park Company says the $11 million spray dryer will give dairy companies an opportunity to research and develop high-value products, such as infant formulas, which sell in supermarkets for ten times the value of milk powder exports.

Chairman, Michael Spaans, says New Zealand's milk powder is in most infant formulas sold around the Asia-Pacific region, but it's the formula manufacturers who are capturing most of the value of the milk.

"The facility that we are building today is at this stage only capable of making whole milk and skim milk products. But in the future we hope to make the facility available for instant formula."

The company is confident that the spray dryer, which will have the capacity to produce 1.5 tonnes of milk powder an hour, will be rather popular for companies wanting to use it.

"Currently today, most of NZ's milk powder are ingredients into other value added products that are used by the bigger customers, for example Nestle.

"There are other companies within NZ that would like to actually take that step and get into value added products. But they need to be able to access a facility to not only develop their products, but to commercialize their products.

"So they need a facility that can do small-scale runs, and currently in NZ Fonterra is the only facility capable of doing that. So this will actually help a lot of these companies to have the facility to develop the products."

Waikato Innovation Park expects the new spray dryer plant should be operating by May next year.