Dairygold outlines price of expansion
Suppliers will be expected to pay 0.5c/l on supplies over 75,000l
Dairygold milk suppliers will be expected to pay 0.5c/l on all milk supplies above 75,000l, as part of the co-op's processing expansion plan.
The revolving fund, which has already been approved by the Dairygold board, will apply to all milk supplied and not just 'new milk'.
The Dairygold package was outlined to regional committee members in a series of meetings last week. The final proposals will be detailed in letters to the co-op's 3,000 milk suppliers, which are due to be sent out this week.
The southern processor expects milk supplies to grow by 63pc in the five years following the abolition of milk quotas. This is based on a survey of suppliers carried out last year.
In order to process the additional 550m litres annually, Dairygold plan to build two 7.5t/hr driers at their site in Mallow, Co Cork.
The development of the Mallow plant will be on a phased basis, with the initial construction of the milk intake and processing facilities and the commissioning of the first drier taking place in 2015-16 and costing €130m. The second drier will be installed closer to 2020, if needed, and is expected to cost a further €40m.
While bank loans will finance much of the development, it is proposed that €50m will be delivered by the co-op's milk suppliers. This will involve four mechanisms.
The first is the revolving fund of 0.5c/l that will be clawed back on all milk supplies above the 75,000l threshold.