July 16, 2012
Ireland's Dairygold to improve dairy and milk processing capacity
Ireland's top dairy firm, Dairygold, is planning to invest EUR120 million (US$147 million) over the next eight years to improve its milk processing capacity.
Currently, the dairy co-operative processes 29 million litres of milk per week, which will be increased 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 co-operative ultimately aims to reach production levels of almost 52 million litres per week by 2020 with its latest investment.
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 EU milk quota restrictions are set to end in 2015, Dairygold noted that its suppliers 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 seek 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 a part of the project, Dairygold will expand the capacity at its site in Mallow, by setting up two 7.5 tonne/hour 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 as a part of the project.
Dairygold noted that apart from the recent investment, an extra EUR50 million (US$61.2 million) 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.