Dairygold is to establish a new €15.6 million research and development (R&D) centre in Mitchelstown, Co Cork, doubling the number of research staff to 30.

The Applied Food Sciences centre will specialise in developing consumer food products. It will be operational in two years and employ 15 people.

Dairygold chief executive Jerry Henchy said that the company aimed to lead the way in the development of innovative new value-added food products.

"The centre will require significant funding but the potential rewards, both through the development of new products and the creation of intellectual property assets, are exciting," he said.

The investment was announced yesterday by Minister for Enterprise, Trade and Employment Micheál Martin.

The Minister said the initiative highlighted a major commitment to R&D by Dairygold, not only in terms of resources but also in long-term R&D planning.

"This is a very welcome development for the Irish food industry. Reform of the Common Agriculture Policy as well as changes at WTO [ World Trade Organisation] level have led to fundamental shifts in the Irish food sector. Commodity prices have fallen dramatically and continue to fall," Mr Martin said.

"The future lies in the development of new and innovative high-value-added health-enhancing food products through the application of science, technology and innovation."

The new centre will see increased collaboration with Teagasc Moorpark, the National Food Centre and Irish universities. It has the capacity for 50 researchers but that figure is unlikely to be reached until sometime after 2007.

Dairygold is the Republic's third-largest food and agribusiness provider with a workforce of 1,800. It is also the largest farmer-owned producing entity with 5,500 farmers included in its 8,000 shareholders.

Mitchelstown Business Association chairman Tony Lewis yesterday welcomed the announcement. However, he said locals were still reeling from Dairygold's decision to move its administration staff from north Cork to the Cork Airport Business Park.

"Any creation of a job is welcome but, in the context of the job losses that have taken place at Dairygold, this [ R&D centre] is a minuscule repatriation of jobs."

Meanwhile, Cork east Labour TD Joe Sherlock said the announcement was a PR stunt from a company that had taken a hammering in the media because of recent jobs losses.

"When that centre actually opens I will say that it is a good thing but, frankly, I am not very impressed by it... I believe this is an effort by Dairygold to present the company in a better manner and it just doesn't work."

Dairygold has shed 1,000 jobs over the past year.