DFA aims to build new milk market

KANSAS CITY, Mo. – Dairy Farmers of America Inc. announced that it is in advanced negotiations with Ireland-based Glanbia and the dairy farmer members of the Greater Southwest Agency to form a new joint venture, according to Wayne Palla, chairman of the Southwest Area Council.

The Greater Southwest Agency includes Dairy Farmers of America, Select Milk Producers Inc., Lone Star Milk Producers Inc. and Zia Milk Producers Inc.

Region. The project calls for building a $170 million cheese and whey products plant in the western Texas/New Mexico region.

“The new plant will be supplied by the region’s dairy farmers and it will be 50 percent owned by Glanbia and 50 percent by DFA and the cooperative members of the Greater Southwest Agency,” Palla said.

Funding. The proposed project will be partially funded by a $70 million equity investment split equally between Glanbia and the cooperative members of the Greater Southwest Agency.

The remaining approximately $100 million will be directly financed by the joint venture entity from third party sources.

Details. If the project proceeds as planned, commissioning of the new facility would be in the second half of 2005.

Once fully operational, the new facility is expected to generate an estimated $340 million in sales annually and employ approximately 200 staff.

“Glanbia will be responsible for day-to-day plant operations, sales, and marketing of the plant’s dairy products. The Greater Southwest Agency will coordinate the milk supply,” Palla said.

Processing. Once fully commissioned, the new facility will annually process more than 2.27 billion pounds of milk and produce 253.5 million pounds of cheese and 16.5 million pounds of high, valued-added whey proteins.

Over time, the plant is also expected to become the largest advanced whey processing facility in the Northern Hemisphere.

According to Palla, the new joint venture with Glanbia would, ultimately, create an important new market for Dairy Farmers of America members and the dairy producers who market their milk through the Greater Southwest Agency.