Agama, the agonizing story of milk in Mallorca

PalmIn the 19th century, Mallorcans didn't consume cow's milk. "Many houses had a goat, or even a man on their estates who sold goat's milk," says Mateu Morro, who was Minister of Agriculture in Francesc Antich's government. But changes related to the Second Industrial Revolution (the growth of cities, improved transportation, and the establishment of factories, among others) increased demand for milk in the main urban centers. To supply the population's needs, according to Morro, "European varieties of cows were brought in that were specialized in producing a lot of milk."

Therefore, at the end of the 19th and beginning of the 20th centuries, it didn't take long for Mallorcans to focus on more intensive milk production. The number of dairy farms producing milk "was approaching a thousand years," according to Baltasar. Thanks to this, the first dairies began to be built on the island, such as the Mallorca Dairy Industry (Ilma), which was established in 1940. With the aim of promoting its development on the island, in 1958 a group of farmers organized into a cooperative launched the Mallorca General Agrarian Association. Baltasar Martí, a farmer who sold milk to Agama for 42 years, still remembers how they transported it from the dairy farms to the dairy. "We put it in 40-liter pots and loaded them onto a truck, just like the ones used today to transport gravel," he says. That business project to sell the island's milk has overcome various difficult circumstances and is now facing a new complicated episode after the current owners announced to the farmers that they would no longer buy milk from them in 2026.

Between the 1970s and 1980s, the dairy farms suffered their first crisis due to the salinization of aquifers (which made it difficult to produce animal feed) and the introduction of milk from outside. These factors also affected the dairy's activity, which in 1990 filed for bankruptcy "due to the deep crisis the sector was experiencing, which caused losses of more than 1 billion pesetas," according to a statement from the group's Board of Directors at the time. After this, the farmers remained the owners of the association, but sought alliances to manage it. They began negotiating with banks, suppliers, and other creditors to defer or restructure debts, and also sought support from public authorities to obtain subsidies to maintain their activity and sales channel so that producers would not lose their market.

In 1997, the Mallorcan food distributor Comercial Bordoy bought Agama. The company carried out a capital increase and a management restructuring to save a local brand with potential and strengthen the popular Laccao chocolate milkshake, which would later become the company's flagship product. With this dynamic, the company recovered significantly, as well as the trust of local consumers, who had not forgotten who and why Agama was created. Furthermore, Comercial Bordoy managed to position the products produced at the factory—such as butter, fresh cheeses, cream, and yogurt, among others—as well as points of sale.

In 2017, when Comercial Bordoy had already revived Agama, the Damm group bought it. With this transaction, it acquired the Agama and Laccao brands, but not the facilities, which still belong to Comercial Bordoy today. Starting in 2016, Agama's milk sales had already begun to decline due to the progressive entry of competing brands, resulting in an ever-increasing surplus that the company was unable to sell on the market. Agama reduced its milk purchases from local producers by 10%. Months later, the same situation persisted, and the company now applied a 40% reduction in milk purchases from farmers. According to its executives, "the company had accumulated losses of nearly six million euros and had a surplus of almost 4.5 million liters of milk that had no outlet on the islands."

In recent years, the company's sales have continued to decline, and by 2025, the drop is expected to be 20% compared to previous years, according to Damm figures. This is mainly due "to the strong price pressure exerted by private label brands and milk from outside the island that dominate supermarket shelves," according to sources from the brewing company at ARA Baleares. Therefore, in order to "ensure the viability and competitiveness of the business, Agama is forced to reduce its purchase of raw milk from local farms," they added. However, there will be no further reduction because in 2026, the company will stop purchasing milk from the three dairy farms that, at this point, are still operating.

This fact leaves the future of the three farms, and indeed that of the Agama workers, in jeopardy. However, sources at Damm explain that "today, no decision has been made regarding" the definitive closure of Agama. "Different scenarios are being studied, and solutions are also being sought to minimize the impact this may have on the dairies, but nothing has been decided," they add.

If Agama stops purchasing milk from Mallorcan dairies, it could lead to the government withdrawing the strategic industrial project designation it granted just 20 months ago. To grant the designation, the Ministry of Agriculture set a condition: that investments in the dairy sector be maintained, a requirement that will not be met with the halt in purchases from local producers. Therefore, at the next Industry Council, Fernández will present a proposal to withdraw the designation.

Sources close to Agama have told ARA Baleares that this halt in milk purchases could be a "calculated strategy to dismantle the company," since, they claim, the lease for the facilities ends in 2027. However, if it closes in two years, Agama will close in two years, entering on December 4 to carry out a project, since the Government granted it on condition that it maintain its activity until December 4, 2029. Despite seeming like a terminal situation, it would not be the first major crisis that the Mallorcan dairy sector, which has written its history based on agony, has overcome.