The potential for scale economies in milk powder processing: an Irish case study

Abstract

This paper examines the difference in costs associated with milk plants of differing dryer scale in Ireland. This is an important question for international competitiveness in the context of the removal of the EU milk quota in 2015 and the expectation that Irish milk production could increase considerably thereafter. Using confidential data obtained from a number of sources, the differential in the cost of processing at differing plant scales was established. It was found that two 7.5 tonne/h dryers at a single location provide a level flexibility which offsets the slight cost advantage associated with a 15 tonne/h dryer.