Chief executive Jerry Henchy said a future without quotas may result in a significant increase in milk from its suppliers.
“With that in mind we have lodged a planning application with the county council for a state of the art milk drying facility.
“This development will reinforce Dairygold Food Ingredients Mitchelstown as a centre of dairy processing excellence into the future,” he said.
The planned facility will cost an estimated €50 million and create 50 jobs.
Dairygold has already invested more than €40m in a cheese manufacturing plant and a dairy ingredients facility in Mitchelstown.
Mr Smith, who officially opened the upgraded processing facilities yesterday, said €23m of this investment programme has been supported by his department through its dairy investment fund.
“The dairy investment fund has been a key element in our overall strategy for the development of the milk sector. The aim of the fund has been to assist modernisation in dairy processing by supporting capital investment projects.
Dairygold chairman Vincent Buckley said the grant aid is part of the co-op’s ongoing investment in its dairy processing infrastructure.