Business

Will Chinese babies save our dairy industry?

INVESTMENT: Norco's $4.5 million faith in dairy future.
INVESTMENT: Norco's $4.5 million faith in dairy future.

THE Gympie region is on the cusp of a new era of prosperity with confirmation yesterday that Australian billionaire Gina Rinehart is planning a $500 million investment in the Mary Valley and South Burnett to export infant formula to China.

The planned operation will directly employ about 400 people and create one of Australia's biggest dairy farms, producing up to 30,000 tonnes of baby formula a year as well as UHT (ultra-high temperature processing) milk.

Production is hoped to begin in the second half of 2016, according to a Sydney Morning Herald interview with Hope Dairies' co-investor and director Dave Garcia.

Hope Dairies is controlled by Mrs Rinehart's Hancock Prospecting Ltd.

It wants to acquire 5000ha of farmland in the South Burnett and build a processing facility in the Mary Valley.

The Gympie Times understands the processing plant will be built on an 800ha property near the Bruce Hwy interchange with the Mary Valley Link Road, at the corner of Carlson Rd and the Old Bruce Hwy.

It is unsure yet exactly where the South Burnett dairy farm will be established - whether it will be closer to Kingaroy or Gympie.

But one thing is certain: this changes the playing field for our region's ailing dairy industry.

Dairy industry leader John Cochrane yesterday described it as the "best news" he had heard in his 59 years.

Mrs Rinehart's move comes as Australian miners expand into food production to tap into the rising demand from Asia's middle classes. The $18 billion infant formula market in China is forecast to double by 2017, after the world's most populated nation loosened its one-child policy last year.

"There's another 50 million mouths probably coming online," Mr Garcia told the SMH.

The deal is not finalised, but is expected to be signed next week.

The planned operation will adhere to strict biosecurity standards and produce 70-75% of its own milk from a herd of about 16,000 holstein cattle, including 10,500 milkers.

The rest of its milk will be sourced from local dairy farms.

Talking with industry experts, The Gympie Times understands there are logistical hurdles to overcome regarding the farm in the South Burnett, including water supply, feed and milking facilities, none of which have ever been attempted in Queensland on such a scale.

China in May tightened its standards on imported formula following concerns over contamination. In 2008, locally made milk powder contaminated with the chemical melamine killed at least six infants in China.

Federal Trade Minister Andrew Robb told a dairy conference in Melbourne earlier this year Australia's food and agriculture sectors had to seize on the chance to feed Asia's expanding middle class.

Chamber welcomes short and long term benefits

GYMPIE Chamber of Commerce president Ben Ellingsen joined the chorus of welcome to news of the impending investment yesterday.

"This investment presents another tremendous opportunity for not only the Mary Valley, but the wider Gympie region," Mr Ellingsen said.

"Investments on this scale provide significant initial and ongoing economic benefits.

"Not only does it give our dairy farmers a much-needed shot in the arm, but the ripple effect to numerous other industries is exciting for our region.

"More employment means money flowing around our economy which means that businesses that would not otherwise directly benefit will receive an indirect benefit - everybody wins.

"It also adds to the confidence that has been generated from recent commercial investments in our region."

Project to restore processing capacity, says QDO

THE Queensland Dairyfarmers' Organisation has welcomed news of plans for Hope Dairies Ltd's $500 million investment.

It yesterday described the move as the first major investment in the Queensland dairy industry since the late 1990s.

QDO president Brian Tessmann said the local industry was excited by the prospect of the project, which would include big investments in both farms and milk processing facilities, and was bypassing the problems associated with the domestic milk value chain and proving the high value for the long term for Queensland milk.

"The investment would restore dairy processing capacity which Queensland has lost over the last decade and a half," Mr Tessmann said.

"China presents a real opportunity for our industry to form close partnerships to supply high quality dairy products to their growing population, and in particular infant formula. This opportunity will provide much-needed diversification for our Queensland dairy industry.

"We hope it will provide a range of opportunities for our existing Queensland dairy farming families, which have suffered greatly in recent years from natural and manmade disasters including from the supermarket milk price war and now drought."

Topics:  china dairy dairy farmers editors picks gympie

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