LacPatrick (LP) Co-op has confirmed that it will invest €42m in new processing facilities at Artigarvan in north Tyrone. This is a major decision by the board of the producer co-operative, recently formed through the merger of the Town of Monaghan and Ballyrashane Co-ops.

It is the biggest ever single investment in milk processing in Northern Ireland and a huge expression of confidence in the future of dairying in the northwest of Ireland, at a time when the sector is very depressed.

Throughput at the Artigarvan site is expected to more than double to a potential 2.5m litres per day, with the new 7.5t/hour drying plant and the existing milk dryer using natural gas as their main source of energy following the extension of the gas pipeline to the Strabane area. It is expected to begin production in March 2017.

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Announcing the investment this week, LacPatrick chief executive Gabriel D’Arcy indicated that it is to be funded entirely without government grant aid. The funding will come from the large reserves held by LacPatrick and some borrowing. According to D’Arcy, the borrowing has been secured at very favourable rates. With this decision, the new co-op is serious about its vision to grow and to be a “new force within the Irish dairy industry”.

Speaking at the first producer meeting of the new co-op in Armagh earlier this week, D’Arcy expressed his “disappointment” at the level of support extended by government agencies to the proposed project, with LacPatrick told that no funding was available from Invest NI.

“If I went south of the border I know there would be a queue of agencies rallying around to support us. Every element is fully focused on the agri-food industry there,” he said.

However, despite that, the decision was taken to press ahead with the investment in NI, with the majority of the milk pool from northern suppliers.

According to D’Arcy, the strong reserves of the co-op have also enabled it to support recent milk prices and he confirmed that LacPatrick will pay a “supplement” of 2p/litre (2c/litre) for October milk and 3p/l (3c/litre) for November supplies to help producers through the current very difficult circumstances on farms.

D’Arcy said the technology being incorporated into the new facility would allow the production of high-specification milk powders such as low-spore and no-spore products, which are in growing demand in Japan and other parts of Asia.

However, much of the output is destined for markets in Africa, where there is a growing demand for the LP brand. The factory output is sold in around 30 countries. He aims to double market share in Africa.

The new LacPatrick co-op also aims to have the lowest carbon footprint of any dairy supplier.

D’Arcy says that this is important to customers, who have been attracted by the fact that the co-op uses energy from an anaerobic digester plant at Ballyrashane. He told the Irish Farmers Journal that the new facility “fits like a glove with the cutting-edge technology on milk fats at Ballyrashane”.

D’Arcy anticipates that LacPatrick will continue to supply skimmed milk to the Abbotts infant formula factory in Monaghan (currently around 140m litres per annum) as part of its output. He is keen to push ahead with having as many suppliers as possible signed up to the farm assurance requirements of Origin Green and Red Tractor as these are also sought by many customers. According to D’Arcy, the Origin Green branding is being well received internationally, while Red Tractor is more for the British market.

The investment will add around 15 high-tech jobs to the workforce of LacPatrick, mostly at Artigarvan. Up to 150 people will be involved in the construction work over the next 15 months.