A CHINESE billionaire has his sights set on WA as home to a powdered milk plant.
In a recent visit to Busselton, Zong Quinhou, mainland China's richest man, was shown a number of potential sites for the processing plant.
If the project goes ahead Mr Zong's group would look to establish its own dairy farm in the region as well as outsourcing milk from local dairy farmers to supply milk to China.
Mr Zong is the chairman of the group Hangzhou Wahaha, which is China's largest beverage producer.
He had previously indicated the group was looking to spend $200 million on milk production and processing in WA.
According to Agriculture and Food Minister Terry Redman, this was just the kind of foreign investment the WA dairy industry needed.
"This industry has been looking for this sort of investment for some time," Mr Redman said.
"What it does is build our production capacity.
"Given that there is no one domestically prepared to step up to the plate and put that investment on the ground I think foreign investment is a source of capital to be able to achieve that."
Mr Redman said the domestic focus of the WA milk sector had long been a downfall and having an added export market would give dairy farmers in the region some options when it came to selling their milk.
"Currently farmers are at the beck and call of what the retailers decide to sell their milk for on any given day," Mr Redman said.
"But farmers want options and when they have options there is true competition in the marketplace and they have a chance of getting better prices.
"There wouldn't be one producer out there who wouldn't want the choice of some options of where they can sell their milk."
WAFarmers dairy section president Phil Depiazzi said any investment in the industry was positive.
But he was concerned about how realistic the benefits would be to local dairy farmers.
"First of all the price they anticipate to pay to attract milk is unrealistic," he said.
"Also we have to realise that last summer we were short of milk in WA.
"I have seen some numbers projecting milk production will decline a further five per cent this coming season, while consumption will increase by 4pc.
"So we are going to be short of milk.
"Talking about being able to export a major quantity of milk from the State at this point in time is just pie in the sky."
Mr Depiazzi said to get surplus milk in WA to feed this kind of plant the industry needed a sustainable price, which would see growth in the sector.
"We need to be around 50c a litre to cover costs this summer," he said.
"On top of that wheat prices are $100 a tonne more expensive than this time last year which imposes a 3c/L to 3.5c/L extra cost of production to farmers.
"At the moment we are leaning towards less production than more and until we address these issues there are not really the cows, the will or the investment needed to support such a project."
Although Mr Depiazzi was not opposed to foreign investment, he said he struggled to see the benefits for WA producers and the WA milk supply.
"If the Chinese pay a higher price then you are going to see milk taken out of the State and milk supply in WA affected," he said.
"But I don't think the price they are thinking is anywhere near there, so I can't see the immediate benefits for local producers."
Mr Redman hit back at claims the plant would force milk supply away from domestic consumption saying the group's plans would be complementary to the WA industry.
"But I realise as it stands the milk supply in WA couldn't support this kind of project and it will require an increase in production capacity," he said.
"You can't snap your fingers and instantly have that and some kind of plan will have to be built over time but I am absolutely certain it can be achieved.
"You can't sit back and say WA couldn't feed a plant like this.
"That is just assuming the industry won't grow."
