Denmark-based international cooperative Arla Foods and the Dairy Farmers of America (DFA) have teamed up to build a $58 million dairy plant in Western New York for cheddar cheese production. In their first collaboration ever, the two farmer-owned cooperatives plan to explore opportunities to build premium-quality standards in the cheddar category by providing American consumers with more cheese options free from growth hormones and artificial ingredients.

“Together with DFA and eight of their farmers, who will supply the raw milk, we will explore the opportunities in building premium quality standards into the cheddar category through the Arla brand. Adding cheddar to our US portfolio will make us more attractive to the retailers and help increase the sales of our European products made from owner milk,” says Peder Tuborgh, CEO of Arla Foods.

Part of the joint venture agreement is the construction of a production site in the western part of New York located near the eight farms supplying the raw milk. The farmers will supply approximately 70,000 tons of raw milk annually, which meets quality standards similar to Arla’s proprietary farm quality program Arlagården. Construction on the site is expected to begin later this year with production starting in the fall of 2017. DFA will own 70 percent of the joint venture, 20 percent by Arla and 10 percent by the farmers.

“We are pleased to be entering into this partnership with Arla. Arla and DFA share the same passion for providing the highest quality products to consumers and are committed to sourcing these products from dairy farmers who employ sustainable and transparent farm practices,” says Rick Smith, president and CEO of DFA.

The US market is one of six strategic growth regions identified in Arla’s corporate strategy ‘Good Growth 2020’. Arla’s goal is to become a top 10 player in the retail cheese market by expanding the business beyond the deli section into the dairy aisle, where 92 per cent of the US cheese sales take place. A newly launched big bet in the dairy aisle is Arla branded cream cheese, which has no artificial growth hormones, artificial ingredients or flavors.