According to the Catalan group, most of Mallorca’s production has no outlet and it will have to reduce prices to farmers as well as cut milk purchases from producers. Damm has announced that Agama is making losses
The viability of the Agama factory in Mallorca is at risk due to the drop in consumption of this brand of milk and the increase in costs due to inflation. Damm group managers have explained in Palma that since they bought the brand, in 2017, losses of 6 million have been generated. This despite an investment of 7 million to modernize the factory where the milk is packaged and part of Laccao’s production is made.
Reduce purchase volume by 40% in six months
The managers of the Catalan group claim that the price increase has caused Balearic consumers to opt for cheaper brands. In view of this situation, they have announced to the 6 farmers in Mallorca from whom they buy milk that they will do without up to three of them. The objective is to reduce the volume of purchases by 40% in six months. They also want to negotiate with the farmers a reduction in the purchase price of milk in the new contracts, starting on the first day of October. At the moment, according to Damm data, Agama pays farmers between 3 and 4 cents per liter more than the median price to the Peninsula.
Damm presented in the Govern a strategic industrial project with Next Generation fund that foresees an investment of 42 million euros to start up a new Agama factory, a bottling plant for the Rosa Blanca beer brand and a logistics center. But the future of this project, the directors add, depends on public support and also on Agama’s viability in an economic context that they describe as very complicated.
Agama meets this morning to address the consequences of the announcement
For his part, the Councilor of Agriculture, Joan Simonet, said that it is not them but Agama who have to do work to improve sales. Similarly, he was surprised that the company has passed on the drop in sales to farmers. He also recalled that Mallorcan milk is part of the campaigns to promote the consumption of Local Product that the Government has been carrying out for some time.