Fonterra Australia and Bellamy's Australia Limited have entered into a strategic agreement for the production of a range of new baby nutritional powders.
According to Fonterra, this five-year, multi-million dollar agreement is part of the transformation of its Australian operations.
Fonterra managing director Oceania Judith Swales said: "This is our strategy in action for Australia, where we focus on the areas we can win in a highly competitive market to deliver the best returns.
"We are actively growing our nutritionals business through strategic partnerships and agreements, which will see the Darnum nutritionals plant move towards full capacity.
"Our Australian business has particular ingredients strengths in cheese, whey and nutritionals, complemented by our strong consumer and foodservice businesses; and today's announcement with Bellamy's Australia, one of the fastest growing infant formula companies, reaffirms our strength in nutritionals.
The new baby nutritional powders will be manufactured at the Darnum plant, which is a leading facility in Fonterra's network.
"Leveraging our Fonterra Research and Development Centre in Palmerston North, the largest dairy innovation centre in the southern hemisphere, we will bring innovation to the Darnum plant and the nutritionals market to capture growing demand," Swales added.
Bellamy's is a leading infant formula company with strong brand presence and expertise in the organic ingredient supply chain.
In the fiscal year of 2014-15, Bellamy's has seen revenue growth of 156%.
Infant formula forms part of 88% of Bellamy's sales.
Swales added: "The proposed multi-million dollar strategic agreement will help support the growth of Bellamy's Organic in Australia and abroad, and builds on our strong current relationship."
Meanwhile, Fonterra is close to finalising the Darnum joint-venture with Beingmate Baby and Child Food Company after the recent approval from Beingmate's board and shareholders.
By the end of this year, the companies aim to finalise the proposed arrangements, with the agreement slated to begin next year.
