Dairy Farmers of America (DFA) will be the main shareholder with 70% of the new venture, together with Arla Foods taking up 20%. The eight farmers who will supply milk to the plant will take up the remaining 10% in the new cheese factory in western New York.

The new plant is expected to cost $58m (€52.2m) and will utilise 150 million pounds (68,040 litres) of milk annually.

Arla Co-op, which is owned by 12,700 farmers in Demark, Sweden, the UK, Germany, Belgium, Luxembourg and the Netherlands, is using this opportunity to build its capacity within the US as that market has a restricted quota for cheddar cheese imports.

DFA is the biggest US dairy co-op with more than 14,000 members on 9,000 farms.