The co-operative ultimately aims to reach production levels of almost 52 million liters per week by 2020 with the latest investment of €120m.
According to the company, the investment is required to address the increase in milk production forecasted by Dairygold's suppliers in a survey.
Since the European Union milk quota restrictions are set to end in 2015, Dairygold noted that its suppliers have estimated a 63.5% increase in milk production - from 941 million liters in 2011 to 1.54 billion liters a year by 2020.
Dairygold chief executive Jim Woulfe said that in developing a post quota strategy, the co-operative's board and management will continue to seek maximum commercial equation.
"Our proposition is robust and cost-effective; it leaves scope for expansion while enabling continued co-processing and co-operation with neighbours if mutually beneficial," Woulfe added.
As a part of the project, Dairygold will expand the capacity at its site in Mallow, by setting up two 7.5 tonne/hour dryers - one in 2015 and the other in 2019. This capacity increase will enable the co-operative to produce a variety of products including whole milk powder, fat filled milk powder and infant milk formula base.
An existing dryer at Mitchelstown will also be upgraded as a part of the project.
Dairygold noted that apart from the €120m investment, an extra €50m would be needed as working capital to cater to the additional product volumes with long lead times before customers make their payments.
To fund the increase in working capital, the co-operative plans to utilise member funding mechanisms including loan note, revolving fund, minimum shareholding and deferred payment.
