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Governor announces multimillion-dollar loan to INDULAC to renovate and modernize milk processing plant.

March 10, 2023

Puerto Rico Governor Pedro R. Pierluisi, along with Secretary of the Department of Housing William Rodríguez Rodríguez, announced today an $11.8 million investment by Industria Lechera de Puerto Rico Inc. (INDULAC) to launch its Capital Improvements and Resilience Project with assistance from the Department of Housing's Economic Development Investment Portfolio Program (IPG).

Of the $11.8 million, the loan granted to INDULAC under the IPG will be $4.7 million and will help the company renovate and modernize its milk processing plant, improving its capacity to process and supply locally produced dairy products. Additionally, the purchase and installation of equipment, including a Tetra machine, palletizer, separator, pasteurizer, and steam line, will be facilitated.

"This initiative aims to renovate and modernize the processing plant, improving its capacity to process and manufacture dairy products for the residents and consumers of Puerto Rico. Through the IPG Program funds, we are providing financing opportunities to entities whose large-scale projects are promoting the revitalization of Puerto Rico through commercial and industrial activity, job creation, and economic growth on the island," said the governor.

In turn, the chief executive emphasized that the investments being made with these funds will foster sustainable economic development. “The dairy industry in Puerto Rico has a multiplier effect that encompasses services in multiple sectors of the economy, generating more than 16,000 direct and indirect jobs. Once again, we are investing the federal funds we have strategically, putting the best interests of Puerto Rico above all else. This is a great project that will benefit our people. I will always support the potential of our agriculture, including the dairy sector in Puerto Rico, and I am committed to working for its growth, progress, and important place in our economy,” the governor added.

For his part, the Secretary of Housing asserted that the dairy industry “is one of the key drivers of the local economy, so every cent spent on its expansion will translate into sustained returns for the people, with the ability to create new jobs. The recovery funds are there to address various needs, and today we are investing in the expansion of our Island's economy.”

The new equipment will have the capacity to process other products with higher viscosity, limiting dependence on exports while increasing local production. Furthermore, this new technology will reduce energy and water consumption by 30 percent, while reducing waste by 20 percent and improving packaging quality to offer a wider variety of product sizes to consumers.

It will also address market trends in the dairy industry regarding the consumption of ultra-high temperature (UHT) milk, a product identified as essential by the Puerto Rico Department of Health. It will also allow processed milk production to double from 4,000 to 8,000 quarts per hour.

Pierluisi explained that the IPG program provides extremely favorable terms for the development of these projects that promote economic growth, such as a 2 percent interest rate and the possibility of forgiving 50 percent of the loan, subject to meeting program requirements. Additionally, Puerto Rico Farm Credit will finance $4.4 million.

Meanwhile, INDULAC President Francisco Oramas Irizarry emphasized that "through the $11.7 million investment in the INDULAC plant, we hope to improve the efficiency and handling capacity of locally produced milk, add value, and continue improving production performance for farmers. These funds will be used for the development of Phase II of INDULAC's capital improvements. We also hope to be able to serve new emerging markets with a differentiated product and the export market with improved compensation for farmers. With these new initiatives, we aim to generate and retain 20 direct jobs."

During the event, Secretary of Agriculture Ramón Gonzalez Beiró emphasized that Puerto Rico's dairy industry is growing. "Now, with this new economic injection, the development of dairy products is being promoted and diversified, ensuring the quality and freshness of the milk produced here, Grade A milk. In the Department, we have been making changes to strengthen everyone in the industry, from dairy farms to producers and processing plants. That's why we are here today, demonstrating with actions this government's commitment to Puerto Rican agriculture. We wish great success."

The Milk Producers' Cooperative (COOPPLE), the parent company of INDULAC, represents over 70 percent of Puerto Rico's dairy farmers.

Meanwhile, the President of the COOPPLE Board of Directors, Manuel E. Martínez Arbona, commented that “since COOPPLE represents the majority of the Island's dairy farmers, we are committed to leading the development of the dairy industry through the Route 2024 Project, which proposes the modernization of our practices to adapt to demographic, consumer, and environmental changes. With the investment of these funds, we intend to execute the modernization plans for our INDULAC plant to ensure we can manage production and continue delivering the best product to Puerto Rican consumers while guaranteeing agricultural jobs in our livestock operations and continuing to contribute to Puerto Rico's economy.”

How the IPG Program Works

The purpose of the IPG is to provide a financing opportunity to grant loans of up to $50 million to promote the economic revitalization of the Island by renewing commercial and industrial activity on a large scale, creating jobs and fostering local economic growth.

The IPG has an allocation of $800 million in CDBG-DR recovery funds. Of this, $600 million was allocated to provide supplemental financing to projects with an unmet need to begin or complete construction.

By offering financing opportunities, the IPG Program seeks to alleviate the effects of the economic recession exacerbated by Hurricanes Irma and Maria through large-scale, transformative, and job-creating redevelopment projects capable of generating a cascading economic impact.

Loans granted through the IPG provide favorable terms and conditions for project development, including a 2% interest rate. Up to 50 percent of the loan may also be forgiven, subject to compliance with the requirements established in the IPG Program guidelines.

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