As a result of the closure of Grupo Lala's factory in Costa Rica, the 37 thousand liters of milk that 70 local producers sold daily to the company of Mexican origin were left without a buyer, however, Dos Pinos promised to acquire the product.
On December 1st Grupo Lala informed that it will close the milk plant that operates in the province of Alajuela. According to the company, the factory will stop operating on December 11th.
After Grupo Lala decided to close the operations of its dairy production plant in Costa Rica, a debate began over whether Dos Pinos' dominance in the local market was due to protectionist policies or to the brand positioning, quality and price of its products.
Arguing that there is greater potential for sustainable and profitable expansion in Nicaragua and Guatemala, the Mexican business group dedicated to dairy production decided to close the operations of its production plant in Costa Rica.
In Costa Rica, the cooperative Coopeleche increased by 25% the volume of raw material sold to the Mexican Lala, a rise that would be explained by the better positioning of the company in the local market.
In general, volumes produced have increased, since official figures detail that between 2017 and 2018, milk production in Costa Rica grew by 1.5%, going from 1.14 million to 1.16 million tons.
Mexico's Lala invested $14 million in the purchase of high-tech machinery and the expansion of its dairy plant located in San Ramon, Alajuela province.
Managers of the Mexican company reported that the area of the facilities was expanded from 4,240 m2 to 24,250 m2, and with this expansion the company reaches a processing capacity in the country of 150 thousand liters of milk per day.
The Mexican company Lala will be building a milk, ice cream and by-products factory in Guatemala, with capacity to process 5 thousand tons of products per month, and it will start operating in the first quarter of 2018.
The 12 thousand square meter production plant will be built in Escuintla and will have a production line of pasteurized milk, ultrapasteurized (UHT) milk and ice cream.
The Mexican company Lala plans to invest $14 million in the expansion of its plant in Alajuela and to start selling milk and ice cream in the Costa Rican market, starting from 2018.
The investments being made in Central America by companies in the dairy industry reflect the growth potential of this business in the region, where per capita consumption of milk and dairy products has been growing during the last years.
There still remains tasks to be completed in the process of preparing to compete with milk and dairy products, which in 2025 will start to enter the country duty-free under the CAFTA.
In regards to how to prepare for the next market opening, José Antonio Madriz, President of the National Chamber of Milk Producers, told Nacion.com that there still remains work to be done, and that they"... have approached the Ministry of Agriculture and Livestock (MAG) several times, as lead agency, to establish joint plans between the private sector, government, universities and other research centers, but the result is insufficient."
Health authorities in Costa Rica have given their endorsement to two plants belonging to Grupo Lala in Nicaragua so that they can once again market their products.
The authorization for Grupo Lala comes at about the same time as the authorization granted by Nicaragua to theentry of products from the Costa Rican company Dos Pinos, ending a conflict which for several months affected the performance of the sector in both countries.
The health authorities have announced that they have reached an agreement, but no dates or deadlines have been set to resume sales of the product between the two countries.
Theagreement announcedby the Ministry of Agriculture and Livestock of Costa Rica and theInstitute for Protection and Agricultural in Nicaragua only mentions assessments to be made in plants belonging to the companies Dos Pinos and Grupo Lala, but does not mention dates on which they will be carried out or deadlines for the resumption of bilateral trade in milk.
The transaction, which was carried out in 2015, was not announced at the time in Costa Rica, where high production costs have prompted several companies to move their operations to Nicaragua.
In 2015 the Costa Rican dairy producer Dos Pinos bought the industrial plant La Completa for an undisclosed amount.Dos Pinos is a cooperative network made up of more than 2,000 associated producers and workers.
Health authorities in Costa Rica have confirmed that since May they have prevented the entry of products from two dairy plants belonging to the Mexican company Lala in Nicaragua.
After information was circulated about the alleged closure of the Nicaraguan market to dairy products from three companies in Costa Rica, the health authorities of this country have acknowledged that since May 2016 they have restricted the entry of Lala's dairy products , having detected".. . several examples of "non - compliance" in the production system of the two plants inspected. "
Lala Group intends to take advantage of the free transit of goods in Central America to produce and export milk from Nicaragua to the entire region.
The Mexican company Lala confirmed the positive performance of Nicaragua's economy, announcing its intention to turn the country into a production hub and to export dairy products to the rest of Central America.
The start of operations by Lala will have a favorable impact on the conditions of production and quality of milk and stabilize the price of milk for producers.
The start of operations of a plant with capacity to process up to 300 thousand liters of milk per day will result in benefits not only for the production sector, which could sell most of the expressed milk, but also force an improvement in the regional dairy market conditions, infrastructure and production practices related to animal feed, sanitary measures, among other things.
The Mexican group has announced an agreement to acquire all the assets of Eskimo and its subsidiaries in Nicaragua and the rest of Central America, without disclosing the amount of the transaction.
Eskimo SA is a food company in Nicaragua which has been operating for more than 72 years. Its main products include ice cream, milk and yoghurt. In Nicaragua, Eskimo is a leader in the dairy industry and its brand is synonymous with ice cream.