China's biggest agricultural conglomerate is buying big parcels of prime land in the State's south as part of its plans to invest up to $4 billion creating a supply chain direct from WA farms to the Chinese food bowl.

The Beidahuang Group, ultimately owned by the Chinese Government, wants to buy and lease more than 100,000ha to grow grain for export direct from WA to China.

Beidahuang has paid $52 million to snap up about 30,000ha in the past month and the purchase of more farms is being finalised as part of its strategic spending spree.

The latest purchase by Heilongjiang Feng Agricultural, an arm of Beidahuang, is another piece of its plan to create a supply chain that operates independently of State grain handler CBH.

HFA has just paid a company controlled by high-profile WA farmer David Webster $23.2 million for about 6500ha near Ongerup.

The Ongerup properties are in virtually a direct line with 23,336ha of prime land near Lake Varley - bought by HFA for $29 million this month - and the port of Albany.

It is understood HFA will continue to target farms in this zone to create economies of scale. Its plans revolve around huge investment in on-farm grain storage, a rail link to the port and the building of grain handling and loading facilities at Albany.

A source close to HFA said the overall investment could reach $4 billion, depending on the group's success in making its supply chain financially attractive to local grain growers to complement the crops grown on its farms.

HFA met CBH to discuss paying to use the co-operative's existing storage, handling and loading facilities but has so far opted to push ahead with its own supply chain.

It would bypass CBH's port facilities in a first for bulk grain exports from WA as the wheat industry heads for complete deregulation.

Ships bound for China would be loaded from the site of the existing woodchip facility at Albany harbour by Albany Bulk Handling, a joint venture between Asciano - Australia's biggest rail freight and ports operator - and Japanese company Itochu.

Beidahuang has invested heavily around the world, including in Russia, Canada and Argentina, as China moves to secure food supplies.

It employs about 1.4 million people in China through its farming, food and chemical companies.

In Argentina, Beidahuang recently pledged $1.4 billion in irrigation infrastructure in return for a 20-year contract to grow corn, wheat, soy and dairy products for the Chinese market.

The deal in Argentina is similar to the one officially announced last week between the State Government and Shanghai Zhongfu, which was named the preferred developer of 15,000ha on the Ord River irrigation scheme.

Shanghai Zhongfu, trading in Australia as Kimberley Agricultural Investments, plans to grow sugar cane and build a sugar mill to export directly from Wyndham to China. It will meet development costs but pay a nominal rent to the Government in return for a 50-year lease on the land.

Although Shanghai Zhongfu is not state-owned, Premier Colin Barnett strongly backed investment by Chinese Government-owned conglomerates when he confirmed the Ord deal.

Mr Barnett said it was fact of life that big Chinese investment came from state-owned entities.

"State-owned enterprises are playing a major role in the development of this State," he said.

Mr Webster, chairman of iron ore company Athena Resources and a director of Australian Wool Innovation, refused to comment on the land sale.

The initial sale of land near Lake Varley came after the collapse of companies controlled by prominent WA grain grower Dennis Joyce.

Agriculture Minister Terry Redman and the Pastoralists and Graziers Association have backed the Chinese move.

The West Australian

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