A feasibility study looking at the potential of building a baby formula processing facility in WA has been cautiously welcomed by WAFarmers dairy section president Michael Partridge.
The independent study is examining whether a facility would be viable at Collie, Scott River or in the Peel region.
Mr Partridge said building a facility could address two major problems facing the WA dairy industry but warned there was no point getting too excited at this early stage.
“The first problem is the lack of value in the core business which is providing the State with fresh milk every day of the year,” he said.
“The second problem is because we have an isolated market and don’t have a significant infrastructure that creates an export opportunity.
“That means as soon as there is too much milk it is a cost rather than an opportunity.”
He said a facility would provide an opportunity for growth and added diversity in the industry.
“It would give liquid milk processes in the State access to a balancing mechanism and the farmers would be able to grow milk into another market,” he said.
“But there is a long way to go and the first problem needs to be addressed first.”
WA-based business development and risk management consultant Steve Post initiated the study because it was apparent there was a deficit in the market.
“It was something I had given thought to quite some years ago when it was evident there was a large market in Asia,” he said.
“That’s not only for infant formula but other products such as fresh milk and butter.
“The world demand for dairy is growing rapidly – everyone talks about super foods but there is none better than milk.”
Mr Post estimated the facility would cost $100 million and would provide 30 to 50 direct jobs.
He said he hoped to complete the study by the middle of the year so he could move onto the next stage of securing funding if it was found to be feasible.
“The different areas have different capabilities about what they can and can’t provide,” he said.
“I’m evaluating all of those areas at the moment.
“Over the next couple of months I’ll be looking at all those advantages and disadvantages before I make a decision on what will be the most viable and economic site.”