WARRNAMBOOL Cheese and Butter will supply premium milk powders to Japan for three years.

The listed company, based in southwest Victoria, made the announcement of the exclusive arrangement today.

It involves supplying premium powers to Mitsubishi Corporation in Japan for an initial term of three years with provisions to extend it further.

The specialised powders will be used in the manufacture of high quality milk based beverages and other dairy products for the Japanese market, according to WCB.

WCB chief executive David Lord said he was delighted it would formalise even closer ties with Mitsubishi Corporation.

"The latest agreement is a direct result of our decision this year to upgrade our skim milk powder drier to enable the production of higher specification powders and reflects our stated strategy of targeting premium dairy products and customer specific applications,'' he said.

The supply agreement started at the beginning of this week.