Queensland coal industry figure Bill McDonald, group managing director of mining company MGC Group is behind the project to build a 40,000-strong dairy herd in southwest Victoria.
Development has started on 3000ha of land previously farmed in horticulture, just over the Victorian border from Frances, at Neuarpurr, for conversion under the ambitious stewardship of new owner Camperdown Dairy International (CDI).
CDI is backed by MCG and agricultural investment company EAT group. CDI owns an operational milk powder plant in Melbourne and has control of a second factory in Camperdown, which will undergo a $200 million transformation.
McDonald has secured 20-year contracts with dairy buyers in Asia, the Middle East and the United States.
“What we’ll have is the first dairy business in Australia that’s fully integrated,” he said.
The A$40m dairy farms empire would milk up to 40,000 cows across a network of farms to supply raw milk to its whole-milk powder and infant formula factory at Camperdown in southwest Victoria.
The company planned to attract milk supplies from existing producers in both western Victoria and the southeast of South Australia.
“We need 700 million litres of raw milk so we need to build our own large-scale dairies,” McDonald said.
The two-year plan is to establish five to six dairies initially, milking 30,000 to 40,000 cows a day.
Business would be built around contracts to export 100,000 tonnes of milk powder a year.
Long-term contracts would be offered to farmers to allow them to confidently invest in the industry.
McDonald’s own cows would be barn-housed and milked three times a day, a set-up he said was about animal welfare and optimum production.
The 42-year-old, who was ninth on the Young Rich List in 2012 and now valued at more than $150 million, was understood to be also planning large investment in the red meat industry.
McDonald’s roots lie in agriculture, in southwest Victoria, where his family grew potatoes, sheep and cattle.
In 2004 he went into mining and in 2008 he entered into his own coal mine leases, selling out in 2012 when the market was at the peak.
CDI is MCG Group’s first agricultural development and was prompted by huge potential to fill a hole in the Australian dairy market.
The South Australia Dairyfarmers Association has welcomed the investment in the industry and the offer of long term contracts, something producers had not previously had.
“I hope it introduces a bit more stability on our pricing from year to year, that’s the thing farmers find the hardest, going from a boom to a bust and managing those changes,” association president David Basham said.
Meanwhile, Dairy Australia’s latest Situation and Outlook report pointed to high confidence in the future of the industry and a growth in Australian milk production of about 2.5%.
Many dairy farmers across Australia had experienced a year of consolidation and growth, in contrast to a volatile international market, according to analysis by Dairy Australia.
While international prices remained depressed, Australian dairy farmer confidence in the industry’s future remained high.
Results from Dairy Australia’s 2015 National Dairy Farmer Survey indicated 74% of dairy farmers were feeling positive about the industry’s future.
The survey, of 1000 dairy farmers across Australia, also revealed 79% of farmers anticipated a profit for 2014-2015.
Dairy Australia managing director Ian Halliday said there were a number of reasons why farmer confidence had weathered the global market storm.
“Farmers across many of our dairying regions have been able to take advantage of the stable production margins and favourable weather conditions over the past year.
“Milk processors are publicly forecasting similar farmgate prices for the upcoming 2015-2016 season and continued domestic and global demand for our products have also been encouraging for farmers,” Halliday said.
The more stable returns generated by the Australian domestic market that consumed about 60% of milk production had helped cushion the industry through an internationally volatile 2014-2015.
But also having a diverse range of markets and products had paid dividends for Australian exporters this season.
“It spreads our exposure to the volatility the global market can present at times, hence we haven’t felt the pinch of China’s decreased bulk powder imports off the back of their domestic surplus,” Halliday said.
