Radical proposal to build a billion-dollar, effluent-powered dairy for baby formula market

WA Country Hour
By Joanna Prendergast
Updated 9 Mar 2020,

PHOTO: A Chinese backed dairy company is hoping to build a $1 billion dairy in WA’s Mid West. (ABC Rural: Kim Honan)
Insatiable Asian demand for Australian baby formula has sparked a radical proposal from a Chinese-backed company to build a $1.2 billion, effluent-powered dairy and milk powdering plant in Western Australia.
Key points:
• A plan to build WA’s first milk powdering plan has been proposed by Chinese-backed company WADE
• The company says it intends to operate exclusively as an exporter, but local producers have concerns about the potential impact on the domestic market
• If approved, the plant would be fully operational by 2024 and would create as many as 480 ongoing jobs, the company says
WA Dairy and Energy (WADE) plans to build a 24,000 head free stall dairy south of Badgingarra, in the state’s Mid West region, which would produce 30,000 tonnes of powdered milk per annum.
WADE CEO Ian Thubron said due to the project’s large water requirements for feed production, and the depth of the aquifer at Badgingarra, a self-sufficient and cheaper source of power was needed — effluent.
“Effectively, a pure dairy business becomes a dairy energy and cropping business,” he said.
Mr Thubron said a definitive feasibility study was yet to be completed, but a positive pre-feasibility study on the $1.2b project had spurred WADE and its backer, Tsing Capital Australia, to push forward with the plan.

Baby formula target market
Mr Thubron said the milk produced at the operation would be processed into formula onsite and exported to Asian markets.
He did not view the project as potential competition to the domestic-focussed WA dairy industry.
“Essentially we will receive the milk, we will process it into the branded infant milk product, and that will then be exported through one of the ports or airports available to us,” Mr Thubron said.
“We are looking at producing all of our product for export.
“So, whilst our primary production point might be slightly higher, we add value through processing and branding for export.”

Dandaragan dairy

Concerns for domestic producers South West dairy consultant Steve Hossen said service providers to the contracting WA dairy industry would benefit from such a large dairy enterprise, but he said it posed a risk to any price hikes the existing dairy industry may benefit from.
“We’ve got predominately a domestic market, and that market runs up when milk is short in the state,” he said.
“If that market runs up, and the price goes up … think of yourself as a processor sourcing milk more expensive than this supplier who is 250 kilometres out of Perth, that milk at times will make its way into the domestic market.
“We need to have those runs up in price to help cover the difficult phases we get.

dandaragan shire dairy

PHOTO: Asian demand for Australian made infant formula is expected to remain strong. (ABC Rural: Joshua Becker)

Water licence essential
WADE has the option to purchase two properties near Badgingarra and is currently drilling for water in the area after being granted a 26D licence from the WA State Government.
Mr Thubron said a large volume of water was needed for the project, and a successful application for groundwater access was crucial for the project to go ahead.
“The Yarragadee sub-aquifer is not taken at the moment because the water is too deep to be economically viable to take,” he said.
“We are looking at somewhere over 10 gigalitres, but that will have to be determined based on what the hydro-geological report.”
Water licences in WA are assessed under the Rights in Water and Irrigation Act 1914, which operates on a first in, first served basis.
PHOTO: Dairy cattle would live in free stall barns under a proposal by WA Dairy and Energy at Badgingarra in WA. (ABC Rural: Kim Honan)
Hundreds of ongoing jobs
Mr Thubron said WADE had identified Badgingarra as a suitable location for the venture following a 2012 State Government report into building the dairy industry.
“The reason they determined the Mid West was because of the climate being suitable for the cows, the availability of water, the Brand Highway, the Bunbury Dampier gas pipeline, high-voltage power and so on,” he said.
If the project goes ahead, Mr Thubron said it would create 480 ongoing jobs, and 950 construction jobs.
The next steps include community consultation and a definitive feasibility study, but Mr Thubron hoped earth could be turning on the site as soon as the end of the year.
“It is a very long-term project,” he said.
“You can’t suddenly create a herd of 20,000 cows and barns and start producing, so the whole thing will be phased over a three to four year period.
“We will have phases the will come online during the course of the project, so by the time we get to 2024 when we’ve completed it, we will have started producing over that period of time.

PHOTO: Badgingarra is typically a sheep and broadacre farming area. (ABC News: Jessica Hayes)
Free stall dairy model
The project plans to have 20,000 head of cattle milking by 2024 using a free stall system.
“Our cows are born and grow up in paddocks, at about two years they come into the free stall barn,” Mr Thubron said.
“Within the barn they have access to food, water, shelter and bedding, and outside the barn they have access to the irrigated pivot areas.
Mr Thubron said WADE’s animal welfare policy had received feedback and recommendations from the RSPCA.