November 1, 2012

Bilateral talks between a group of Indian investors and the New South Wales government will be held this week to discuss plans on setting up a dairy business in the Southwestern Riverina region  with an eye to supply Asia's growing appetite for dairy products.

New South Wales (NSW) Premier Barry O'Farrell, who is on a trade mission to India this week, will meet with executives from Vax Housing Finance Corporation Ltd. to discuss setting up a dairy and powdered milk factory in the Southwestern Riverina region. The company plans to export products to India and other parts of Asia.

"I look forward to hearing more about Vax Housing Finance Corporation's interest in investing in NSW," O'Farrell said in emailed comments on Wednesday (Oct.31). "Any investment of the scale proposed by the company is welcome because it creates jobs in regional NSW."

Local media have reported that Vax is planning to invest AUD250 million (US$259 million) in Australian Modern Dairy Pty. Ltd., which plans to build a factory that would create about 200 construction jobs and employ a further 200 people once it is operational. Vax declined to provide any immediate comment.

Mike Logan, chief executive of state lobby group Dairy Connect NSW, said the investment could help modernise NSW's milk production facilities, many of which have closed in recent years as they were too small and inefficient in the face of high energy costs.

"Demand is about to explode in South East Asia as that population demands more Western style diets and levels of protein," he told The Wall Street Journal. "The opportunity to consume NSW milk for powder in an efficient, modern plant with sufficient scale to perform at a suitable economy of scale would be good business."

Australian farmers are looking to cash in on rising demand for dairy products from Asia's rapidly expanding middle class, with local production rebounding after years of drought.

Dairy exports from Australia, already one of the world's largest shippers of milk products to international markets, are expected to rise by 14% to 673,000 tonnes next year as farmers in Victoria and Tasmania states step up production to meet growing international demand, according to the USDA.