Farm Ireland

Wednesday 21 March 2018

Dairygold's €68m milk drier queried

Darragh McCullough

Darragh McCullough

Dairygold's planned expenditure on new milk drying facilities at Mallow are up to triple industry norms, according to the Dairygold Milk Suppliers and Shareholders Group (DMSSG).

Their research of construction costs for new milk drier plants in four countries has concluded that brownfield sites have costs of €3-5m per tonne per hour of the normal rated output capacity.

The comparative cost for the project at Mallow is €9m per tonne per hour of rated output capacity.

The findings are based on the costings for similar milk powder plants built since 2007, including the 7t/hr drier installed at Lakeland's Bailieborough brownfield site in 2010, which cost €20m.

A US dairy company called Dariygold replaced a 8t/hr drier at their Seattle site this year for €17m while the Australian Burra Foods commissioned a 6.5t/hr plant in 2010 for €23m, claimed the author of the study, David Murphy.

Dairygold declined to supply any information in response to a request for an explanation the €68m that is earmarked for a 7.5t/hr drier at their brownfield site at Mallow.

A statement from Dairygold's secretary Eamonn Looney said that "during the course of 2012 and into 2013 we discussed our expansion plan in great detail with members, culminating with an overwhelming approval."

A separate study carried out by Dr Michael Keane on behalf of the ICMSA in 2011 estimated the cost of a 15t/hr milk powder plant to be approximately €70m on a greenfield site.

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Dr Keane attributed €40m of this to the costs associated with developing and servicing a greenfield site with infrastructure such as roads, electricity, gas, waste-water and storage facilities.

DMSSG claim that build costs are similar globally since a major German supplier, GEA, builds the majority of new plants.

The group, who represent the majority of Dairygold suppliers that are refusing to sign up to the milk supply contracts that the co-op introduced last year, believes that the Munster dairy processor needs to offer more transparency on how it intends to use the €120m it plans to invest in Mallow over the next seven years.

Irish Independent