Member for Wannon Dan Tehan and Dairy Farmers Australia president Noel Campbell faced repeated concerns at the meeting that new entrants to the regional dairy industry would be at the expense of existing dairy processors.

Both men argued the increased demand from the new entrants should lead to higher milk prices.

The meeting was organised by the United Dairyfarmers of Victoria (UDV) Wannon branch and attracted about 80 people.

Farmer Power spokesman Chris Gleeson, of Crossley, told the meeting he was concerned existing processors would be unable to provide higher milk prices when their share of milk production was reduced by new players such as the Chinese-backed Linear Capital, the Midfield Group and Camperdown Dairy International.

Mr Tehan said “factories wanting milk is what we want”.

“If those three entrants come into the market, they will compete strongly for your milk,” he said. 

“That is what will drive prices up.” 

The higher prices should attract people in other enterprises such as blue gums, beef and sheep to convert to dairy and boost milk production, Mr Tehan said.

Another Farmer Power spokesman Steve Garner, of Warrnambool, focused his questions on the proposal by Tasmanian investment firm Linear Capital to establish a vertically integrated dairy company in the south-west and what farmers could do to oppose it.

Mr Campbell said he did not regarded Linear Capital’s proposal for a vertically integrated company, with its own farms supplying its own factories, as a threat and it could grow the industry. 

He said the Murray Goulburn co-operative was a vertically integrated company with dairy farmers owning a share of the next production stage.

Mr Campbell said Linear Capital had told him it had taken out 12-month options to buy 50-60 south-west dairy farms to supply an infant formula factory it wanted to establish in Colac. No farms had yet been bought, he said.

If the Colac plant was successful, it would build another factory “further west”.

His personal view was the venture should use the existing industry capacity in Colac to produce the infant formula rather than build its own factory, he said.

Linear Capital had said half of the funds for the venture would come from China, 25 per cent from another international entity and 25 per cent from Australia. The venture would use the present owners to operate the dairy farms.

It also wanted to use the vacant Glenormiston College to train workers for its farms and the wider dairy industry.

While there has been concern about growing Chinese investment in the dairy industry, Mr Campbell said 97 per cent of dairy farms in Australia were family farms.