A deal estimated to be worth more than $1 billion over five years has been struck between a Western Australian meat processor, a Chinese importer and the Inner Mongolian government.
The deal would see WA's largest red meat processor V&V Walsh significantly increase its exports to China through Chinese importer Grand Firm.
The WA company plans to export up to 50 sea containers of frozen boxed meat per day, as well as 500,000 lambs and 30,000 cattle a year during the first part of the project.
We hope the incentive is going to get the farmers to produce a few more cattle and a few more lambs, and the only reason they're going to do that is if they get their just rewards.
Peter Walsh, V&V Walsh
There would be $200 million of Chinese investment into WA to increase lamb and beef production and a further $800 million investment in Inner Mongolia to develop new processing facilities and a network of feeding systems.
Peter Walsh, who owns V&V Walsh with his brother Greg, said the biggest question would be where to source livestock.
"That's where the farmers are going to get their return on their money," he told 720 ABC Perth.
"We hope the incentive is going to get the farmers to produce a few more cattle and a few more lambs, and the only reason they're going to do that is if they get their just rewards."
Mr Walsh said the investment into WA would be through the signing of joint management agreements with farmers.
"We're looking at opportunities where we might be able to do joint ventures with farmers and grow with them and put the capital in, and they might be a bit short of capital but they manage it, and we've got the market and they've got the produce and we'll put long-term contracts in place and it's safe for everybody," he said.
Deal will boost confidence in agriculture: Minister
Agriculture and Food Minister Ken Baston said prospects for the growth of beef and sheep meat into China are high, as they currently consume far less than those in Australia.
"For every one kilogram of extra lamb meat consumed in China, an extra 65 million lambs will be required," he said.
"For every one kilogram of extra beef consumed in China, an extra 6.5 million cattle will be required."
Mr Baston said the deal would restore confidence in the agriculture sector.
"I think it's an exciting phase that agriculture's entering into in WA," he said.
"It's something that will give it a boost, this means jobs, employment, confidence in people investing in buying farms et cetera."
Mr Baston said the deal would have a flow-on effect to other producers.
"This is just a market deal that's been done into China but there's other operators in abattoirs and of course there's other countries in Asia that are requiring clean food," he said.
"In agriculture, the door's wide open from beef, sheep meat, horticulture products, niche markets, dairy products, so I think it's a very important message that comes back through here for all farmers involved in agriculture."
Mr Walsh said the construction of the new processing facilities in Inner Mongolia would begin in a matter of weeks.