Nestlé’s milk suspension leaves Panama’s farmers in limbo

PANAMA – Nestlé, a multinational food company, has announced that it will halt the collection of 16,000 litres of milk per day from producers along the Tonosí and Villa Lourdes routes in the province of Los Santos, Panama, raising alarm among livestock farmers who fear devastating economic consequences.

Nestlé stated that it would stop purchasing about 16,000 litres of milk on time, harming more than 400 agricultural producers, primarily those dedicated to producing grade C milk. 

This abrupt cessation has plunged part of the sector into a supply overload crisis, leaving producers without an immediate market for their product. The situation highlights the vulnerability of the value chain to market fluctuations and the high dependence of producers on limited processing capacity.

According to industry sources, the company’s measure is justified by an excess in milk production that seems to have exceeded the capacity of its facilities. This imbalance between the supply of raw milk and the plants’ processing capacity has created an emergency, especially for producers in the Los Santos region and surrounding areas.

The immediate consequences for dairy producers are severe. The inability to sell their daily production not only affects their income but also jeopardizes the sustainability of their operations in the short and long term.

Samuel Vernaza, President of the National Association of Cattle Ranchers (Anagan), said, “We are trying to prevent this company from leaving, because Nestlé’s departure would cause great uncertainty and unrest, and such an action would lead to the collapse of the sector. This puts primary milk production in the country in serious trouble.”

He called on the national government to intervene and prevent the suspension of the purchase and Nestlé’s alleged withdrawal from the country.

 “They would stop purchasing 16,000 liters of milk daily out of the 35,000 liters they were buying, leaving them with only 19,000 liters daily, a 45% reduction,” he added.

In response, the sector has swiftly coordinated with the Ministry of Agricultural Development (MIDA) to find emergency solutions.

Among the alternatives being considered is the possibility of negotiating with other processors to absorb the surplus or implementing a government emergency purchase program to process the milk into dairy products like powdered milk or cheese, thus avoiding waste.

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