The funding will be used to build a 2000 square metre "fermented food and beverage factory", Bass Labor MHR Ross Hart, deputy Labor leader Tanya Plibersek and opposition Innovation, Industry, Science and Research spokesman Senator Kim Carr will announce on Wednesday.

However, the $5 million funding is half of what Northern Tasmania Development Corporation had pitched to both Liberal and Labor parties.

The organisation, on behalf of its seven Northern council members, sought $10 million funding from federal government over three years.

A Centre of Excellence for Fermentation is expected to cost $16 million, with $3 million for fit-out and equipment promised under major capital funding, $2.5 million in ancillary works by West Tamar Council, donated land valued at about $500,000 and $10 million in federal funding.

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A recent FermenTasmania study suggests an additional 350 jobs will be needed in the Tasmanian fermentation industry within the next five years.

The centre can be used by several companies at once and will "boost innovation and reduce barriers to entry for start-ups and existing businesses in Tasmania and help them to scale-up", Ms Plibersek said.

It includes collaboration between the University of Tasmania and TasTAFE to give students the skills and knowledge to be part of the fermentation industry.

"Australia and Tasmania have a reputation as the best in the world for food and beverage production," she said.

"Labor is making this commitment today to ensure we continue to lead the globe as the industry grows and finds new export markets."