After the quota: Dairygold plans €120m investment programme

Dairygold Co-op, one of Ireland’s largest dairy processors, has confirmed its post quota strategy for the society, in light of members’ projected 63.5% increase in milk production, post-quota. In a guide sent to its 3,000 milk suppliers, the society’s chairman, Bertie O’Leary described the board approved strategy as “the most efficient and cost-effective post quota strategy for the business and a good and sustainable solution for our members”.

Dairygold has commited to accept all the milk that its members would produce post quota. Dairygold’s milk suppliers have forecast of a 63.5% increase in milk production from 941 million litres in 2011 to 600 million litres a year extra by 2020. In order to facilitate that expected increase, the society has agreed a carefully planned and phased investment of €120 million over the next eight years to incrementally expand its weekly processing capacity by 18.5 million litres by 2020.

Dairygold’s product strategy is firmly established in cheese and dairy ingredients and its expanded product profile will focus on these core products. The society’s three exisiting processing sites at Mitchelstown, Mogeely and Mallow have capacity for varying degrees of expansion. Sweating these existing facililities makes absolute sense for Dairygold as they offer established infrastructure, which will reduce the capital cost of expansion.

The society is already investing from its existing cash reserves to increase its weekly processing capacity by 4.3 million litres (15%) by 2014. This comprises expansion at its speciality cheese plant at Mogeely and its cheddar plant at Michelstown, the latter is one of the largest in Britain and Ireland.
Once the expansion plans at Michelstown and Mogeely have been concluded, further investment will comprise of an upgrade of the existing dryer in Mitchelstown and the development of two 7.5 tonne/hour dryers in Mallow, one in 2015 and one in 2019 or earlier if required.