© FRNSWMore than 100 firefighters were sent to the scene.
The factory in Bomaderry, north of Nowra, caught alight at about 1:30pm on Monday.
Several employees attempted to fight the fire before Rural Fire Service and Fire and Rescue NSW crews took over.
Shoalhaven Fire and Rescue Inspector Rick Jones said the factory was full of highly flammable powdered milk, which had prolonged the firefighting efforts.
"The product itself is something that burns very fiercely, which was evident yesterday," he said.
"You could see the height of the flames and the smoke it was a very ferocious fire."
Inspector Jones said the product caked when heated.
"It actually forms a heat bead and burns very well," he said.
"When you have large quantities of it, it is quite difficult to extinguish."
Roof to be removed
Several pocket fires continue to burn inside the building and the blaze is not expected to be extinguished until tomorrow morning.
"The issue at the moment is the roof is covering a couple of large mounds of the product, which continues to burn," Inspector Jones said.
"Until we can move [it], we won't be able to get our water jets in and fully extinguish the fire."
At one stage more than 100 firefighters and 24 vehicles from stations between Moruya to Wollongong were at the scene.
Inspector Jones said the Shoalhaven had not seen such a major industrial blaze in at least a decade.
"It would be a good 10 years since we've seen a fire that commands that kind of response," he said.
The blaze sparked a grassfire nearby that impacted the train line, but it was quickly extinguished.
The enormous plume of smoke could be seen across the region and several residents shared videos and photos of it online.
Inspector Jones said the cause of the fire was still being determined.
Nowra police said they were onsite, but were not investigating at this stage.
Is anyone keeping track of the number of these fires?