The deal is between Silver Fern Farms and Scott Technology, which will deliver a fully automated lamb-processing system expected by late 2023.
The technology will be installed at the Silver Fern Farms Finegand plant in South Otago and will result in it producing better-quality meat with increased yields.
The deal, followed a series of purchases for stand-alone automation units to be deployed at other Silver Fern sites, brought the cost to about $13 million.
Scott Technology chief executive John Kippenberger said the deal was a world-leading development.
The automated system works by X-raying the carcass and sending that information to the cutting machines.
The cutting machines then automatically adjusted to take apart each lamb cleanly and effectively.
Once the carcass was broken down it was moved down the line for workers who cut it for sale by hand.
For lamb, clean cuts were essential and the new system would result in a more consistent, high-quality product, Mr Kippenberger said.
The process meant there was minimal carcass waste, which was important for farmers as they did not want to see their animals go to waste, he said.
It would not only provide a better product, it would also take pressure off staff.
Silver Fern Farms chief executive Simon Limmer said it would take about 10 people to disassemble the carcasses in the factory, but now those workers could be redeployed to other, safer positions.
Breaking down the carcass was also a hazardous task which used dangerous pieces of machinery, and it was good those workers could be moved to safer positions within the factory, Mr Limmer said.
The industry was "very short-staffed" and with those staff working further down the line the workers could focus more on quality, he said.
The system has a processing capability of 600 full carcasses an hour.
