Dairygold to invest in raising milk processing capacity

Dairygold Co-Operative, Ireland’s leading farmer-owned dairy business, plans to invest €120m over the next eight years to boost its milk processing capacity.

Currently, the co-operative processes 29 million litres of milk per week and plans to increase this capacity by an additional 4.3 million litres by 2014, as part of its existing development plan, which includes investing in its speciality cheese plant at Mogeely and cheddar plant at Mitchelstown.

The €120m investment will additionally increase Dairygold’s milk processing capacity by 18.5 million litres per week, boosting its total capacity to 52 million litres per week by 2020.

According to the company, the investment is required to address the increase in milk production forecasted by Dairygold’s suppliers in a survey.

Since the European Union milk quota restrictions on suppliers are set to end in 2015, Dairygold noted that its dairy farmers have estimated a 63.5% increase in milk production – from 941 million litres in 2011 to 1.54 billion litres a year by 2020.

Dairygold chief executive Jim Woulfe said that in developing a post quota strategy, the co-operative’s board and management will continue to pursue the maximum commercial equation.

"Our proposition is robust and cost-effective; it leaves scope for expansion while enabling continued co-processing and co-operation with neighbours if mutually beneficial," Woulfe added.

As part of the project, Dairygold will expand capacity at its site in Mallow, by setting up two 7.5t/hr dryers – one in 2015 and the other in 2019.

This capacity increase will enable the co-operative to produce a variety of products including whole milk powder, fat-filled milk powder and infant milk formula base.

An existing dryer at Mitchelstown will also be upgraded.

Dairygold noted that apart from the €120m investment, an extra €50m would be needed as working capital to cater to the additional product volumes with long lead times before customers make their payments.

To fund the increase in working capital, the co-operative plans to utilise member funding mechanisms including loan note, revolving fund, minimum shareholding and deferred payment.

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Image: The €120m investment will boost Dairygold’s total milk processing capacity to 52 million litres per week by 2020. Photo: Alessandro Paiva.