Dairygold Co-op, one of Ireland’s largest dairy processors, has confirmed its post quota strategy. As a farmer owned co-operative Dairygold has committed to accept all the milk that its Members would produce post quota. Through comprehensive surveys Dairygold’s milk suppliers have themselves 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 Eur120 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. Dairygold’s three existing processing sites at Mitchelstown, Mogeely and Mallow have capacity for varying degrees of expansion. Sweating these existing facilities makes absolute sense for Dairygold as they offer established infrastructure, which will reduce the capital cost of expansion.

Dairygold 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 Mitchelstown, the latter is one of the largest in Britain and Ireland.

Dairygold plans to invest Eur120 million to add another 18.5 million litres weekly capacity up to 2019. This 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.

In addition to Eur120 million capital investment required for expansion an associated Eur50 million increase in working capital will also be required to accommodate the extra volumes of product with long lead times before customer payment. The Dairygold board has agreed that the investment required cannot be funded from operating surpluses, existing reserves or entirely from bank debt and an element of Member funding is required. Based on projected financials and corporate finance evaluation the Member funding required is in the order of Eur50 million.

FrieslandCampina and Unilever have joined forces in a project that will boost the availability of sustainable dairy ingredients. Key elements of this project are animal welfare, energy use, waste management and reduction of the carbon footprint. This year, a total of twelve farms operated by FrieslandCampina member farmers have been assessed against Unilever’s criteria and another 118 farms will be assessed before the end of March 2012. This will allow Unilever to buy sustainable dairy ingredients from FrieslandCampina before the end of next year.

Dirk-Jan de With, vice-president procurement global food ingredients of Unilever, explains: “We are always looking for ways of working with our suppliers to drive sustainability in our supply chain. Within the Unilever Sustainable Living Plan we are committed to source all our agricultural raw materials sustainably by 2020. As dairy is one of our top ten raw materials we are pleased to work together with FrieslandCampina on sustainable dairy.”

Independent auditor, Control Union, is supporting the technical process, gap analysis and assessments. Based on the outcome of the first assessments, Control Union has made recommendations and improvement plans in order to fully embed the Unilever Sustainable Agriculture Code. These recommendations will be incorporated during 2012. The farms included in the project will carry out a self assessment each year.

Roelof Joosten, executive director ingredients of Royal FrieslandCampina, says: “We are glad that at FrieslandCampina we are already able to fulfill the Unilever criteria on sustainability. This is an opportunity to reduce the total eco footprint in the entire production chain.”

FrieslandCampina announced in its corporate strategy, route2020, that it was aiming for climate-neutral growth between 2010 and 2020. To achieve this, it is working closely with the member farmers of its dairy co-operative to devise a standard for sustainable dairy farming.