Arla Foods, a global dairy cooperative based in Denmark, and Dairy Farmers of America (DFA), Kansas City, Mo., entered into an agreement to form a U.S. joint venture for the development and production of premium cheddar cheese. The joint venture will include construction of a dairy facility for cheddar cheese production in western New York. 

“Together, with Dairy Farmers of America and eight of their farmers who will supply the raw milk, we will explore opportunities to bring premium quality standards to the cheddar category through the Arla brand. 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,” says Peder Tuborgh, chief executive officer of Arla Foods.

“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 even more committed to sourcing these products from dairy farmers who employ sustainable and transparent farm practices,” says Rick Smith, president and CEO of DFA.

Construction on the new production facility is expected to begin in the fall of this year, and production is expected to start in the fall of 2017. The farmers are members of DFA and will supply approximately 70,000 tons of raw milk annually, which will meet quality standards similar to Arla’s proprietary farm quality program Arlagarden.

The goal of the joint venture is to become a Top 10 retail cheese player by expanding the business beyond the deli section into the dairy aisle, where the majority of U.S. cheese sales take place.

The joint venture will be 70% owned by DFA, which also will manage the operation, 20% owned by Arla and 10% by the eight farmers who supply the milk. The investment in the joint venture is expected to be $58 million, and is expected to employ 30 people.