A £17m mill is to be built on the site of a 182-year-old Kirkcaldy business.

Carr’s Milling Industries has won a seven-figure government grant to build the flour mill, the first to be constructed in Scotland for 30 years.

The mill, at the site of the old Hutchison milling business, will allow Carr's to stay close to its Scottish customers' baking and biscuit industries.

Chief Executive Chris Holmes said the new mill would be "state-of-the-art" and would run alongside the old mill on the site.

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He said: "The mill we have got at the moment is quite an historical mill. It is like any business: we have to invest in the future."

The new mill, supported by a £1m regional selective assistance grant, will start production in September 2013.

Lena Wilson, chief executive of Scottish Enterprise, said: "The decision to develop the first new flour mill that Scotland has seen in 30 years is an important investment for the Fife economy, the local supply chain, and Scotland's food and drink industry as a whole and will help to safeguard jobs in the long term."

But Mr Holmes could not guarantee that all 71 current jobs at the Hutchison mill would remain.

He said: "It's better having fewer jobs than none at all."

(NE)