Girgarre's Australian Consolidated Milk factory plans to begin producing cheese in August.
The factory will produce cheddar and mozzarella curd, in a move to optimise the use of milk solids.
The cheese will mostly be sold in the domestic market to manufacturers of retail products and food service industries.
ACM managing director Michael Auld said producing a range of products would help to diversify business risk, and cushion dairy farmer suppliers from pricing volatility.
“If we had a narrow market or product focus, ACM pricing would ride the highs to the top of the market cycle and the lows right down to the bottom and this would be reflected in volatile farm gate pricing,” Mr Auld said.
“We don’t think this is the best model for long-term sustainable profitability.
“Cheese helps us maximise the value of our solids by balancing our protein across the streams.
“For example, powder requires less protein and cheese requires more protein — so by having both we are in balance for protein and therefore there’s no need to bring other products onto the site such as lactose.”
ACM will increase its factory workforce by 15 per cent to 60 employees when the cheese portion of the factory is fully operational.
ACM chief operating officer Jason Limbrick said ACM was consistently recruiting both permanent and seasonal employees.
He said the expansion was about being an efficient processor, and would allow the Girgarre factory to process more milk.
“The decision to incorporate cheesemaking was to optimise the use of milk solids — cheese is a slightly more stable product in the market and is less volatile compared to other dairy products like milk powder and butter,” Mr Limbrick said.
At its peak, the plant will be able to produce a total of 20 000 tonnes of cheese a year.
Toolamba dairy farmer Suzie Rea supplies ACM, milking up to 800 cows.
“It shows they are committed to the industry,” she said.