Work on the new lactoferrin extraction plant is expect to get under way by April and be completed and ready for commissioning early next year.

Bega's Koroit factory operations manager Chris Evans said the new building would be located to the east of the factory.

"In the construction phase it will be a fairly significant project, so there could upwards of 50 construction employees working on the building and also the fabrication of plant," Mr Evans said.

"It's great for the town because it does give it a bit of stability and bit of security."

Bega chief executive officer Paul van Heerwaarden said the plant would extract 35 tonnes of the lactoferrin protein out of milk each year. 

Mr van Heerwaarden said the lactoferrin was a high-value product which was mostly used as a micro-ingredient in infant formula. 

"In infant formula, or in pharmaceutical-based products, its main function is to improve the immunity system," he said.

Mr van Heerwaarden said the lactoferrin would be used in infant formula produced at Bega's Tatura factory, but also sold as an ingredient to other companies.

"Globally there is growing demand for lactoferrin," he said.

"This is a very high-value, very small volume product. Very different to what Murray Goulburn was talking about previously.

"What Murray Goulburn were looking at a number of years ago was a large spray dryer and a canning plant producing infant formula. 

"What we're investing in here is a plant that's just extracting the micro-ingredient out of milk."

The news of the expansion was welcomed by Koroit businesses and the dairy industry.

Morning Noonan Night milkbar owner Lisa McNamara said the expansion would be good for businesses with the project bringing in workers during construction, and more in long-term employment.

After the demise of Murray Goulburn, long-time resident Helen Keane said it would "perk things back up a bit" in Koroit.

Koroit newsagency's Bob Shanahan said it was positive news for the town.

IGA co-owner Peter Daly, who is still pushing ahead with plans to build a new supermarket, said that the Bega expansion was "sensational news".

"It's fantastic. It's another boost for the town," he said.

"For Bega to inject another $34 million, they've obviously got a lot of faith in the plant."

"It's brilliant that Bega not only purchased the site but they're willing to inject further money."

Mickey Bourke's pub owner Wendy Murley said it was "massive" for the town.

"Things just slowed down and plateaued out, just waiting for things to get back on track again. Everyone was a bid doubtful about what was going to happen," she said. 

"Since Bega's been there it's been positive."

Farmers at the Sungold Field Days in Allansford reacted positively to Bega's announcement.

Jack Kelly, of J and J Stock Agency Warrnambool, said the announcement came at a time when the dairy industry needed a boost.

He said many of his clients had been impacted since Murray Goulburn folded. "The pressure on them has been really, really tough," he said.

"Now for Bega to come in and then to extend the factory, they are going to employ a lot of people and it's a big investment for Koroit and surrounding districts."

Bevan Walker, of Automatic Dipping and Flushing in Timboon, said it was a positive sign for the dairy industry.

"I heard about the step up just recently which is really nice for our clients but it's a positive for the whole district" he said.

"Their expansion of the factory is absolutely great for the district, lots of jobs I suppose."

Rowan Priest, a Gippsland dairy farmer, said Bega's presence was healthy for competition and great for the industry.

David Ackerley, of Dave's Dairy Service in Purnim, said it was important for the region's dairy industry that Bega took on the former Murray Goulburn factory.

"We need industry in the area for the farmers, I think it's a great thing," he said.

"Now we have more competition which is better."

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