Agama, the main dairy company in the Balearic Islands, closes down

PalmThe historic Mallorcan dairy company Agama, founded in 1958 and owned by the Damm Group for the past decade, has announced to its employees that it is closing its Palma plant after years of crisis due to a lack of competitiveness. According to sources at Agama, the company's management offered the fourteen current employees positions at other companies within the group.

In recent years, rising production costs and fierce competition from large brands with extensive geographic reach have severely hampered the sale of milk produced in Mallorca, explains the company, founded almost 70 years ago as the General Agrarian Association of Mallorca, when it operated as the island's central dairy. In 2023, when the Damm Group announced a reduction in its milk purchases from Mallorcan farmers, it also highlighted that, in addition to the highly competitive market, Mallorca faced the added burden of the extra costs associated with its island status. "This situation has directly impacted Agama's economic unviability after ten years of operation," the company argued on Tuesday, detailing that the price per liter of milk produced on the island is between 18% and 50% higher than that of competitors selling milk from elsewhere. Therefore, 95% of the milk consumed in Mallorca comes from outside the island.

It's worth remembering that the Government declared Agama a strategic project almost three years ago, as the company wanted to expand its production capacity with "the addition of a new packaging line for returnable and non-returnable glass bottles, a new yogurt production and packaging line, its own wastewater treatment plant, and a photo plant." According to the report prepared for the Government's declaration of Agama as a strategic project, all of this was intended to provide "a fundamental boost to the local primary sector, specifically livestock farming." The company has also indicated that the owning group has allocated approximately 8 million euros to modernizing the Palma factory since taking over the brand.

For the past six months, the company has been working with the Regional Ministry of Agriculture, Fisheries, and Natural Environment to explore alternatives that would allow it to continue operating and maintain its brand presence in the local market. Among the proposals considered was the creation of a livestock cooperative with the support of the regional government, involving Agama employees and other partners. However, this option ultimately did not materialize, and the company has decided to close. In light of this situation, they informed their employees of the closure and promised them a relocation plan to protect their jobs.

The government says farmers rejected a plan to prevent its closure

The Balearic Government announced on Tuesday that the three dairy farmers who supplied milk to Damm ultimately rejected a proposal to prevent the closure of the Agama plant in Mallorca by establishing a public-private partnership. In a statement, the Ministry of Agriculture, Fisheries, and Natural Environment explained that, since learning of Damm's intention to close Agama, it had expressed "its interest in exploring possible solutions and alternatives" to ensure its continued operation. In fact, nearly six months ago, Damm presented the Ministry with a proposal to transfer the entire Agama operation to the Mallorcan dairy sector, aiming to guarantee the continuity of production and maintain the manufacture and sale of milk on the island. The Government conducted "a thorough evaluation" of this proposal and considered it "a strategic opportunity to preserve a key activity for the Mallorcan primary sector," initiating a proactive and constructive negotiation process. The proposal stipulated that the company managing the plant would have a 25% government stake, 50% private sector ownership, and the remaining 25% held by the workers and dairy farmers responsible for supplying milk to Damm. "However, the three dairy farmers who supplied milk to the Damm Group have ultimately decided not to accept this proposal and to explore other alternatives for the future of their farms," ​​the government stated. It added that, given their "essential" participation, their rejection made it "impossible to continue negotiations under the proposed terms." Nevertheless, the government emphasized that it "fully respects the farmers' decision and, as expected, will continue to support the dairy sector, back new initiatives, and work to strengthen the profitability and sustainability of the farms." Resignation among the workers

For their part, the workers appeared saddened and resigned to a closure that, nevertheless, they "saw coming." Jesús Ávila, the CCOO union representative for Personnel and Prevention at Agama, told Europa Press that since the announcement in October that the company would stop buying milk from the island's dairy farmers, the feeling among the workers was that it would eventually close. He added that, until now, they had been working on the possibility of creating a public-private partnership that would allow the industry to continue, strengthen the value chain, and improve the viability of the affiliated dairy farms. However, he lamented the lack of response from the Ministry of Agriculture, Fisheries, and Natural Environment and expressed his frustration with this situation. Regarding the collective dismissal procedure (ERE) and the possibility of relocation to companies within the same group, Ávila indicated that it is likely some workers will accept it, although he asserted that the employment regulation plan could be declared null and void. "We've gone all out for the company. There are people who joined at 18 and were about to retire. It's a trade that will be lost," he said.