Midfield raises chips in dairy

The news came just a week after the collapse of United Dairy Power last month, which led to the closure of its Murray Bridge and Jervois cheese factories.

The Midfield Group bought the former McCain potato factory site in December last year, and after months of speculation, finalised plans late last month to transform it into a milk processing facility that will primarily service the China market.

The development will create 80 construction jobs, nearly 50 full-time positions and support 110 more jobs in the industry.

The upgraded plant is expected to be operational by July 2016 and requires about 160 million litres a year when it starts.

This will be sourced from SA and western Vic, including Midfield's own farms which produce 40mL annually and are looking at expanding.

Midfield Group managing director Colin McKenna saw major potential for growth in the dairy industry.

"For the farmers, the prices are not as good as they would like them to be but with further investment by various companies like ourselves, that will grow to the extent that they get the benefit," he said.

"We are ourselves dairyfarmers and know the South East of SA is perfectly placed for growth in dairy with sound rainfall and temperate climate."

Mr McKenna said their move into dairy processing was not a step away from their core business, which processes 6000 cattle and 40,000 lambs weekly, and described themselves as being in the "food industry".

SA Dairy Farmers Association president David Basham said Midfield's Penola plans could see new dairyfarms established, and existing farms expand operations to meet demand.

The SE is already home to about 90 of the state's 260 dairyfarmers who produce 60 per cent of the state's milk, but Mr Basham said the Penola plant was easily accessible to all of SA's dairyfarmers.

"With the closure of the UDP plants at Murray Bridge and Jervois, most of our milk is transported significant distances for processing interstate. That is a logistical issue and considerable expense for processors, and a lost opportunity for the local economy," he said.

"This new plant will be ideally placed to reverse that trend. It will be able to draw supplies from western Vic, and it is within easy reach of other SA dairy regions such as the River and Lakes, and Fleurieu Peninsula."

Agriculture Minister Leon Bignell, who met with company representatives at Penola in January, said he was "thrilled" the Midfield Group had chosen SA to further its business.

"They have recognised the advantages of doing business in this state," he said.

"This announcement reflects confidence in the dairy sector, with large investments being made at the farm level and in processing."

Mr Bignell said the growth in global demand for dairy products was outstripping supply, and SA held a major advantage in this sphere, producing about 550mL of milk annually.