California Dairies, the largest member-owned milk marketing and processing cooperative in the state, is to close its Los Banos manufacturing facility.

It has blamed the declining volume of milk in California for its decision, which will affect around 63 employees.

California Dairies, which produces 43% of all the state’s milk, said it will also exit the cream cheese and Neufchatel cheese business, which was served solely by the Los Banos facility. The co-op has five other plants.

Chief executive officer Andrei Mikhalevsky said: “We deeply regret the impact this decision will have on our Los Banos employees and the community, and are committed to supporting our employees through this transition.

“The Los Banos plant has been a valued facility with a long history that has served California Dairies and its members well. Unfortunately, the declining volume of milk in California is affecting the entire dairy industry, and CDI is not immune. 

“These reduced milk volumes, combined with the high cost of operating our Los Banos facility, are the sole drivers behind the decision.”

The Los Banos facility, which is in Merced County in central California, will close its operations over a 60-day period.

California Dairies said it will work with existing customers to enable a smooth transition in the areas of finished goods supply, packaging inventories and, where feasible, forward pack of finished goods.

The Los Banos manufacturing facility has been in operation since 1925, where it was first operated as part of San Joaquin Valley Dairymen, before merging with Danish Creamery and California Milk Producers in 1999 to become California Dairies.