With the funding announced by Parkes MP Mark Coulton on Friday, the family-run business is set to pursue a project it expects will have benefits throughout the economy including the creation of four jobs within the operation.

The grant will be used to purchase and install a state-of-the-art automated processing line to manufacture textured vegetable protein (TVP) and bread crumb products.

Furney's director and CEO Sarah Furney said the new technology would allow crumb production to double, and as a result, the doubling of wheat sourced from farmers within a 200km radius of Dubbo.

There would also be more work flowing to the transport companies that bring the grain to the mill and distribute the end product to markets, she said.

The director said from modelling on the project and ongoing increase in production, it was estimated $1.7 million would be injected back into the local economy.

The flow-on effect into the community was estimated to be equivalent to up to 11 full-time jobs, Ms Furney said.

The employer of 70 people is already the only manufacturer of TVP, a plant-based protein used as a meat replacement or extender, for resale in Australia and beyond, it reports.

The new equipment would lead to a new range, increasing capacity and allowing the mill to supply new markets in Australia and overseas, Ms Furney said.

There was the potential to replace about 500 tonnes per year of imported products in the expanding plant-based proteins market, she said.

"This is just another example of a business in western NSW leading the way, as we strive to innovate and move forward into the future," Ms Furney said.

"Our increased capacity resulting from this grant will help to secure the future of food production not just in Dubbo - but Australia.

"In a post COVID-19 world, we feel strongly about Australia producing our own food products, using local ingredients and suppliers.

"This grant will help us to strengthen local supply chains and reduce reliance on overseas imports."

Mr Coulton said the project tied in well with the government's aim to improve and increase the manufacturing level of Australia.

He said the grant came at a vital time, with some local industries feeling the effects of the COVID-19 pandemic.

"Furney's is an iconic family-owned and operated business in Dubbo, which sources its wheat locally within the Macquarie Valley," he said.

"This $1 million grant from the federal government's Manufacturing Modernisation Fund (MMF) will open up new opportunities for the business and create up to 11 new full-time jobs.

"It will also provide a great confidence boost for the Dubbo region as we face these unprecedented times.

"The current pandemic gives us the opportunity as a nation to reassess and commit to the values of Australian-made goods, such as those produced by Furney's right here in Dubbo."

He congratulated the Furneys for their "innovation".

"I'm very proud on behalf of the government that we can play a small part in enabling this business to grow and maintain such an important role that they do, not only in the Dubbo community, but in the central west," Mr Coulton said.