WestVic Dairy chairwoman Lisa Dwyer, of Hawkesdale, said while she was buoyed by Midfield’s optimism for the dairy industry, she was concerned the Victorian dairy processing industry was already “cluttered”.

Midfield managing director Colin McKenna announced on Sunday the company’s hope to establish a milk powder plant on the site of Warrnambool City Council’s Scott Street works depot.

Asked whether Midfield’s move might boost local milk prices by creating more competition for milk, Ms Dwyer said she believed streamlining the Victorian dairy processing industry would provide a better return for farmers.

But Great South Coast chairman Chris O’Connor said Midfield’s announcement was great news for the south-west.

“I think it’s wonderful that Midfield sees it as a great investment,” the Corangamite mayor said.

Cr O’Connor said Mr McKenna had shown he understood the value of dairying to the local area and was prepared to invest to create new products.

Farmer Power spokesman Jock O’Keefe, of Winslow, said Midfield’s announcement on Sunday confirmed a rumour that had been circulating for some time.

“They would not be doing it unless there was a good market (for milk powder),” Mr O’Keefe said.

He expected Midfield would seek to lure dairy farmers away from their existing milk buyers by paying a more competitive price.

While dairy farmers were traditionally reluctant to change who they supplied, he expected “there will be a few that would move”.

Mr McKenna said on Sunday the company did not intend to take milk supply away from existing milk powder manufacturers in the south-west but to tap into the increased supply of milk the region was expected to produce,

Any growth in the regional dairy industry will not only provide supply for Midfield’s  milk power plant, but will also provide more surplus dairy animals, such as chopper cows no longer wanted in herds and bobby calves for Midfield meat processing operations.

“Milk means meat,” Mr McKenna said.

But Mr O’Keefe said the sale of chopper cows and bobby calves did not provide a significant part of dairy farmers’ income and supplying those animals to Midfield was unlikely to be part of any decision to expand their operations.

“We earn much of our money from milk and the export of dairy heifers,” he said.