Member for Wannon Dan Tehan this week announced the funding would be allocated in Tuesday night's 2021-2022 Federal Budget.

It builds on $17.4 million committed by the state government.

Jamie Vogels is a dairy farmer and councillor in the Corangamite Shire.

The south-west dairy industry is the largest single-employer in the region, making up close to 24 per cent of the national milk production and 27 per cent of Australia's dairy exports.

He said the funding was good news for the region.

"Any money spent on our roads is good, especially the dairy supply chain because there's huge trucks driving around the region daily and that needs to be done safely and efficiently.

"It means the companies that cart the milk around can be more efficient, which will hopefully drive the cost down of transporting milk for farmers.

"It's the biggest industry for the Corangamite Shire."

Mr Vogels runs the dairy with his brother in Scotts Creek, where three full-time workers help run operations and milk 700 cows.

The state and federal money has been welcomed, but still falls short of the $317 million that needs to be spent over 10 years to fix the crumbling dairy supply chain.

The region's dairy production and processing are predicted to increase by 20 per cent over the next 25 years.

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"You don't have to drive far on our roads to realise a lot more money needs to be spent improving safety and productivity for the region," Cr Vogels said.

"This is where the money comes from; primary industry is where it all starts, and if primary industry is not performing there's no money further up the line."

Labor shortages, low housing stock and milk prices continue to be some of the biggest challenges facing dairy farmers in the region.

"We need to be paid more; not only does it make things easier but allows us to operate in a much more environmentally friendly way.

"Farmers always try to do everything as best they can but money dictates how far you can go with everything.

"A big challenges for south-west dairy farmers is labor - getting a good labor force. One of our biggest problems is getting people to work and getting enough money with the milk to be able to employ more people to do it properly.

"We could all use a lot more labor on the farm but you can't afford it, so you either do it yourself or you don't do it at all.

"Housing is also a big issue in the shire, if you employ someone you just about have to have a house on the farm for them to live on."

Bulla Dairy Foods chief executive Allan Hood said the upgrades would benefit not only his workforce but the wider community.

"Anything that supports the dairy industry locally and keeps people and trucks safe, I'm supportive of it," he said.

"Being a growth region there's a lot of trucks on the road and they need to be made safer for our trucks."

Corangamite Shire mayor Ruth Gstrein thanked both tiers of government for their investment in infrastructure which is vital for the shire's economy.

"This latest announcement by Dan Tehan is excellent news for road users who have been crying out for road improvements," she said.

"This combined $34.9 million package will make a real difference to some of the roads in our shire which are of serious concern.

"Some of them are so worn out they pose safety issues as well as having a negative impact on businesses due to increased travel times.

"The Cobden-Warrnambool, Cobden-Stonyford and Camperdown-Cobden Roads have been named as specific beneficiaries.

"The announcement also referred to associated feeder roads and we are keen to see what else is earmarked in the budget when it is released."

The key freight routes, which carry supplies in and produce out, are part of the Barwon South West Dairy Supply Chain which supplies a quarter of the nation's milk production and dairy exports.

"Many of the local freight carriers have reported lost productivity because of slow travel times and vehicle damage from poor roads," Cr Gstrein said.

"Investment in the roads will go a long way towards overcoming these problems which will be positive for business and jobs."

She said improved roads would be safer for other road users, including locals, school buses, farm vehicles and tourists.

Tourism is also a high priority area for the council.

"We are hoping to hear through the budget announcement support for the tourism industry," she said.

"As we know tourist areas have been well supported through the warmer months with domestic visitation but there is considerable concern going into winter and the obvious lack of international visitors.

"We are also hoping for an announcement regarding funding being provided for the Port Campbell streetscape works - a $15m project with $5 million from council and the balance from federal and state government.

"It is imperative to get this work underway quickly before visitor numbers start to return and the last thing we want to do is start construction works that could inhibit business."

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