Lakeland Dairies is to begin a €36 million expansion of its milk powder processing operations at Bailieboro, Co Cavan.

The investment, which comes ahead of the abolition of milk quotas in March, will create 81 new jobs over a five-year period.

The co-operative processes over 800 million litres into a wide range of value-added products and ingredients which it exports to over 70 countries.

Following the ending of quotas, annual milk supply to Lakeland Dairies is expected to increase by some 40 per cent to over one billion litres by 2020.

“The development by Lakeland Dairies is designed to ensure that the co-operative is well positioned to take advantage of all future market opportunities for its milk producers,” the co-op said.

The expansion will see the installation of a new seven tonne per hour milk drying facility at Bailieboro where total milk powder production capacity will increase to 19 tonnes per hour.

Lakeland currently produces 80,000 tonnes of milk powders a year and this will rise to 130,000 tonnes on completion of the project in 2016.

Welcoming the announcement Minister for Jobs, Enterprise and Innovation, Richard Bruton said: "Ihe removal of milk quotas later this year offers huge opportunities that we intend to exploit in a planned and strategic way in order to support jobs growth across every region in Ireland. "

Lakeland Dairies’ chairman, Alo Duffy said, “When EU milk quotas are abolished this year, Lakeland Dairies’ milk producers will have the freedom to increase milk output in line with continuing and future growth in global demand for dairy products.”

Lakeland Dairies' group chief executive Michael Hanley said: "Growth in our global dairy ingredients business is being fuelled by consumer trends and developments in food industry sectors where we have access to key markets and customers throughout the world."