Chinese owned Yo You dairy company in south west Gippsland plans to double its herd size and export over 10,000 litres of fresh milk a day to China.
Gippsland will be the first phase in an operation to establish seven dairy farms across NSW and Victoria to sell premium milk to Chinese consumers at $7 a litre, ABC Rural reports.
The Yo You dairy company runs a farm in Kernot, 100km south-east of Melbourne, and is majority owned by the Ningbo Group, a top 500 company in China.
The company wants to build a processing plant and feedlot in the Bass Coast Shire but it has already faced local opposition.
Managing the permit application on behalf of the group is the professional services company GHD.
GHD manager Jon McNought said he had been waiting for an opportunity to increase investment in Australian dairy.
"They've been interested in the region as far as I'm aware for two or three years since the Chinese scare with their own product," he said.
"A lot of companies have been looking at sourcing dairy products from outside China and Australia is a very attractive proposition for that."
Mr McNough said Australia's free trade agreement with China had accelerated investment in agribusiness in Gippsland with local councils assessing more permits from Chinese companies.
"Even though Yo You have been operating here for a few years they have put this plan into action since the free trade agreement was signed, so that has encouraged them with their planned investment," he said.
"They have chosen Gippsland as their first one mainly because of their proximity to the airport where they will be flying the product out to China."
The China-Austaralia fresh milk market has been busy with activity, with many companies scrambling to position themselves to benefit from the FTA.
Devondale Murray Goulburn has re-launched its Devondale long life milk in China, with bilingual translations, clear messaging about country of origin and the farm's cooperative story.
Fonterra has also been edging closer to securing a milk deal with China, with China’s Ministry of Commerce recently granting anti-trust and strategic foreign investment approval for the proposed partnership with Beingmate.