Bega Cheese has bought a $22 million or equivalent to 15 percent stake in the Victorian dairy company Warrnambool Cheese and Butter (WCB).

ABC reports said quoting Bega Cheese chairman Barry Irvin that the the xompany has taken the maximum shares allowed for the listed firm WCB.

"What both sides said is we wanted to establish a relationship, and I guess the best way to do this is to vote with your feet and make some investments, and put some commitments in terms of myself going onto their board, and see where the world takes us," Mr. Irvin said in the ABC report.

He noted it suited Warrnambool's and Bega's needs and both will benefit in the future.

Bega Cheese says it has financed the purchase by acquiring a loan, thus Bega's 100 farmer owners have not funded the Warnambool investment by forfeiting cents per litre for their milk.

"This is the purchase of an asset that is funded by debt, it is not the payment for milk out of operating cash flows or profits," said Mr Irvin.

"The company looks to do what it can during difficult times of drought. We did increase our milk price yet again only a month ago, and we have one of the strongest prices in Australia.