The plan will be one of 14 innovative projects to share in more than $3.7 million from the Coles Nurture Fund.

Coles announced recently it would provide grants to 14 small and medium sized businesses which are implementing plans to improve sustainability and produce more Australian food and beverages.

The latest grants bring the total financial support provided by the Coles Nurture Fund to more than $28 million since 2015.

NSW agricultural business, Sawmill Circuit will receive a $455,000 grant to purchase a large vacuum truck which will collect manure from 18 dairy farms in the Nowra area so that it can be transported to a biogas plant which is being built in the local area.

Once collected, the manure will be converted to renewable energy and put back into the grid.

Dairy farmers who are part of the plan will benefit from cheaper electricity and will also receive liquid fertiliser which they can apply to their pastures.

The vacuum truck - known as a Nuhn Self Propelled Alley Vac - is manufactured in Canada and is unique to Australia. The biogas plant where the effluent will be processed has received funding from the Federal Government and is due to be operational in 2022.

David Ryan of Sawmill Circuit welcomed the announcement.

"Coles Nurture Fund support to purchase the Alley Vac will make a significant difference to the effluent management for the dairy farms in the Nowra area," he said.

"It will enable the farmers to collect manure for the Innovating Energy Biogas Plant which will solve an ongoing environmental problem which occurs when heavy rainfall leads to effluent run-off into the Shoalhaven River."

Coles Group CEO Steven Cain said the commitment of more than $3.7 million from Round 9 for 14 businesses meant the Coles Nurture Fund had now provided financial support to more than 80 producers since 2015.

"The Coles Nurture Fund was set up to help producers to bring innovative and sustainable ideas to life on their farms and in their factories," Mr Cain said.

"By helping to fund initiatives which increase recycling, reduce water use, increase renewable energy and support local production, we aim to drive generational sustainability in Australia."