There are indications that a Chinese firm might be planning to spend billions of dollars to acquire prime farm land in Western Australia and create a direct supply link to mainland China.

Heilongjiang Feng Agricultural is aiming to acquire and lease more than 100,000 hectares in the area to grow grains that are to be exported to China, according a report carried by local publication West Australian on Friday.

The company has already invested $52 million to acquire farmland in Great Southern and Wheatbelt regions during the previous month and might be creating a supply chain that is independent of WA grain handler CBH. The company has reportedly acquired land near Hyden and Ongerup. There are indications that the investments around towns are attached to a rail link to the port that will provide a direct link for the food grains to flow to China.

Meanwhile, Western Australia said earlier in the month that it has leased more than 13,000 hectares of prized land in its Kimberley region to a Chinese group and indicated that it is willing to hand over more land to China and other foreign investors.

The state government leased the land to China in a deal valued at $700 million. The huge tract of land will be leased to Chinese conglomerate Shanghai Zhongfu for up to 50 years. The land has been made viable by the $500m federal and state Ord River irrigation scheme.

Trevor de Landgrafft, former president of the WA Farmers Federation has dismissed reports of $4 billion investment as propaganda.