DONEGAL Creameries has paid more than £3.7 million for the 3,000 acre An Grianan farm near Lifford, Co Donegal. The farm was purchased yesterday from Mr Tom Grace, the receiver appointed by National Irish Bank.

A spokesman for the creamery said the purchase was in the "best interests" of its milk suppliers who benefit from the farm's lucramilk quota. An Gnanan, has a quota of 413,000 gallons it said, would "minimise" burden of Donegal milk supply under the Super Levy. Over the two years, milk suppliers in have paid more than £500,000 in Super Levy fines, according the creamery.

The sale follows the eviction of the Graham family from the An Grianan estate last month, ending a five year dispute between the family and NIB. Mr Robert Graham and his two sons, Eric and Graham, owe the bank £3.5 million.

Donegal Creameries has said it will farm the land for a while and will review its long term options lover the next three to four months. "We bought it for the milk quota, abut we may look to rent or sell part of the lands later in the year" the spokesman said. The farm, which is the largest in the State, was purchased at the request of the creamery's milk suppliers, the spokesman stressed.

The creamery will put staff in to run the farm almost immediately, to manage the crops and livestock.

There are up to six houses currently on the estate, which also includes 500 acres of Inch lake and its shoreland.

The Graham family purchased An Grianan for £3.6 million in 1989. The farm was paid for with a £2.3 million 20 year loan from NIB, with the remainder being met from the proceeds of the sale of their family farm in Co Monaghan.

Soon after the purchase, however, the bank recalled £1 million and ordered the family to sell some of their land to generate the money. The family refused and relations between them and the bank deteriorated.

A High Court order for the repossession of the lands was issued in 1993 and NIB later appointed Craig Gardner accountant, Mr Tom Grace as receiver.

Mr Grace called in the Acting Sheriff for Donegal to secure vacant possession of An Grianan last month.

Gardai and 40 security men were involved in the eviction of the family from their homes on the estate.