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WELLINGTON, July 10-- The New Zealand government on Friday hailed a major new dairy project with the Netherlands as a stepping stone to a possible free trade pact with the European Union.

The project saw New Zealand dairy giant Fonterra opening a new ingredients plant in the Dutch town of Heerenveen in partnership with Dutch conglomerate A-Ware Food Group, which had built a cheese factory next door.

Associate Minister of Trade Todd McClay, who attended the opening, said the factory was Fonterra's largest investment in Europe and marked an exciting step forward in agribusiness collaboration between New Zealand and the Netherlands.

"This is a win-win situation for both companies and countries, and builds on the strong economic ties between our two countries. New Zealand dairy companies now export almost as much product from Europe as they do to Europe," McClay said in a statement from his office.

"The collaboration between Fonterra and A-Ware is exactly the kind of cooperation we would like to see more of under an EU-New Zealand free trade agreement, which we hope to launch in the near future."

The partnership also highlighted the opportunities for New Zealand and the Netherlands to strengthen cooperation in the agribusiness sector.

The Fonterra plant will process whey and lactose, by-products of A-Ware's cheese-making process, into specialty ingredients to be used in high-value paediatric, maternal, and sports nutrition products for sale in the European Union and beyond.