The Britt family has been farming at Dunnstown since 1830. Over the past two years the family has invested more than $1 million into building a state-of-the-art processing and bottling plant, with the first consignment coming off the production line earlier this month.

The family, which milks 250 cows, is believed to be one of the few dairy farmers in the state to directly process their own product.

"A lot of people outsource the processing," Sheila Britt said yesterday. "Many farmers think about it but have decided it's too expensive. The way we tackled that was by doing a lot of work ourselves."

Mrs Britt's son-in-law, Troy Peterken, said his initial research was on Google. He then went to Queensland to inspect several milk processing plants.

"Years ago, sitting in the shed, we thought, why don't we pasteurise our own milk?" he said. "We thought it would take three months, and here we are, two years later.

"We looked at pasteurisers that cost about $70,000 or $80,000 and thought that would work out OK. And we bought a bottler even before we had the factory.''

His wife, Rachael, said the family was regularly approached by locals wanting to buy milk direct from the farm, which is illegal. "But a lot of doctors are also recommending people that have certain illnesses drink unhomogenised milk, because it's more natural," she said. Mrs Peterken said their own brand, Inglenook, had already been stocked by local businesses.

Bottles of Inglenook had also been sold at Essendon farmers' market, and should be available in IGA stores in the new year.

Mrs Peterken's father, Basil, said the dairy industry was in a "pretty ordinary" state, with the big supermarket chains squeezing farmers' margins.

He said his farm had been supplying milk to the Australian-owned Warrnambool Cheese and Butter for years and would continue to do so. "We have a great relationship with them and they support what we're doing 100 per cent," he said.

The family said they had also spent almost 11 months on compliance, testing and permits.

"The inspector told us it was one of the cleanest and neatest dairy processing factories he had ever seen," Mr Peterken said.

The family said they might branch into other products such as flavoured milk and butter if the demand were there.