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Arla, DFA joint venture to produce cheddar cheese in western New York

Progressive Dairyman Editor Dave Natzke Published on 24 March 2016

Denmark’s Arla Foods, Dairy Farmers of America (DFA) and eight U.S. dairy farmers are forming a joint venture to build a premium cheddar cheese production facility in western New York.

Facility construction is expected to begin this fall, with cheese production starting in fall of 2017, according to an announcement released during DFA’s annual meeting in Kansas City, Missouri, March 23.

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Investment in the joint venture is estimated at $58 million.

The joint venture will be 70-percent owned by DFA, the largest dairy cooperative in the United States. DFA will manage the operation.

Arla, the fifth largest dairy company in the world, will invest about $11.8 million, and have a 20 percent ownership stake in the joint venture.

The eight New York dairy farms, all DFA members, will invest capital and annually supply about 14 million pounds of milk to the facility. They will own 10 percent of the joint venture.

Craigs Station Creamery

The new joint venture is an outgrowth of a business – Craigs Station Creamery – created in fall of 2014, when DFA and the eight farms invested $12 million to build a cold separation plant, producing standardized milk and cream.

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The farms, all located in New York’s Livingston and Wyoming counties, include Lawnell Farms, Coyne Farms, McCormick Farms, Baker Brook Dairy, Southview Farm, Synergy Farm, Noblehurst Farms and Mulligan Farm. Each milks an average of 1,500 cows.

Read more about the family farmer partners of Craigs Station Creamery here.

Phase I of the business was designed to process highly customized dairy ingredients, ranging from rBST-free to Orthodox Union and super kosher, lactose-free, vitamin A- and D-fortified products. The milk is custom blended from 0.09 percent to 40 percent butterfat, depending on customer needs.

In addition to productivity, Craigs Station Creamery emphasizes sustainability, implementing manure digester and solar technologies to generate energy.

Expanding Arla’s U.S. cheese portfolio

Arla has other businesses in the United States, producing branded Havarti, Gouda, Muenster and Fontina cheeses. The New York facility will be the first to produce premium cheddar cheese.

“Adding cheddar to our U.S. portfolio will allow us to expand our offerings to retailers and help increase the sales of our European products made from owner milk,” said Peder Tuborgh, Arla’s chief executive officer.

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The joint venture provides Arla local production capabilities and greater access to the U.S. retail cheese market, absent of import quotas.

The United States ranks as the world’s largest cheese market, and cheddar cheese represents approximately one-third of all cheese bought by U.S. consumers, according to the press release. PD

Dave Natzke
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