The a2 Milk Company will be able to manufacture its own infant formula after it resolved a long-running dispute with Synlait Milk, which has agreed to end an exclusivity arrangement in return for a $NZ25 million ($22.6 million) payment.

The agreement will allow a2 Milk, which also supplies milk, to produce infant formula at its Mataura Valley processing plant, its first major move into manufacturing and one it expects will deliver higher margins and better returns to investors.