The firm blames fierce competition for the threatened closure

A total of 115 jobs are under threat at the Dairygold Consumer Foods Plant UK at Felinfach.

The firm, which has launched a 90-day consultation, said it was under threat from significant over-capacity in the cheese packing sector across the UK.

Farmers and community leaders say they are shocked by the threatened closure of a plant opened in September 2000.

The �3m packing plant was originally built by the Welsh Development Agency for the Aeron Valley Cheese Company with more than �1m of public money.

The factory used sophisticated production techniques such as laser cutting equipment to reduce cheese loss and attracted orders from supermarket chains.

The plant uses laser cutting techniques to cut wastage

It was bought by Dairygold in 2001 and, with a separately-owned processing plant alongside producing a range of cheddar, there had been hopes of expansion.

Management at Dairygold told the workforce on Monday that they could not continue operating at current levels, processing just 10,000 tonnes a year, about a fifth of its capacity.

Site manager John Thomas said: "If a solution cannot be found to stem the decreasing volumes and maintain a viable operation then the management will need to consider ceasing operations at the Felinfach facility."

There was "significant over-capacity across the UK in the cheese packing sector", he added.

Mr Thomas said they had stemmed the fall in throughput at the plant last year with a number of private packing and own-label arrangements, but the plant was still operating below acceptable capacity.

'Hugely disappointing news'

"Dairygold cannot continue to operate the facility at current levels and so we are involved in a strategic review of operations to determine the plant's future," he added.

But farmers leaders have expressed their concern about the threat to milk producers if west Wales if the plant is to close.

Arwyn Owen, directory of policy with the Farmers Union of Wales, said it was "hugely disappointing news" if the plant was to close.

"There's a lot of effort gone in to promoting the Welsh brand...every closure of this nature puts us back a step."

David Davies, deputy president of the National Farmers Union, said he wanted an explanation of why so much public money was put into the plant.

Urgent talks

"We as a dairy industry were led to believe that when the plant was set up five or six years ago that it would be the most modem plant in the UK and the facilities they had there were second to none."

Ceredigion AM Elin Jones is calling on Welsh rural affairs minister Carwyn Jones to hold urgent talks with the firm.

Ms Jones said: "There is a long tradition of cheese production in the Aeron Valley and this will hit the area very hard - 115 jobs in a rural area are extremely difficult to replace."