Milk: from Shortage to Excess

A year ago, milk was scarce in Costa Rica. Nowadays production is above demand, driving prices down.

Tuesday, August 4, 2009

In the past, many producers invested to increase their output. They now see a drop in demand, specially in milk derivatives, caused by the international crisis.

Exporting this oversupply is not an practical option, as production costs are higher than traditional dairy producers like Argentina, Uruguay or Paraguay.

The industry faces the problem of inelastic production, so the only variable experiencing modification is the price paid to the producer, who is receiving less money, and receiving its pay in installments.

Producer prices are also dropping in Panama, but the cause here is a tariff reduction for dairy imports.

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More on this topic

Milk Over Supply in Honduras

August 2017

Honduran farmers are looking for alternatives to commercialize milk in the Salvadoran market, by giving sanitary certification to artisanal dairy plants.

In light of an oversupply of milk that is affecting the Honduran livestock sector, producers are looking for neighboring markets where they can export milk. They report that many of the plants in Honduras are not receiving the surplus product because they do not have the capacity to process it.

Imported Milk Gains Market Share in Panama

May 2017

Nestlé's announcement that it will stop buying C-grade milk from producers from Veraguas reflects the growing loss of market share for local milk to imported products.

Growth in imports of milk and its substitutes continues to take away market share from Panamanian milk producers. In the case of Nestlé Panama, the company reported that "imports of milk substitutes by third parties has caused a decrease in the consumption of certain lines of their dairy products. "For this reason, the company will stop buying 16 thousand liters of C milk per week from producers from Veraguas. 

Honduras - Nicaragua Dairy Conflict Continues

September 2016

A local problem between Honduran farmers and pasteurizing plants due to the price at which they purchase milk could be the reason behind the block on Nicaraguan dairy products. reports that according to the National Federation of Ranchers and Farmers of Honduras (FENAGH), closing the border to milk and dairy products from Nicaragua will continue until there is a resolution to the problem between pasteurizing plants and dairy farmers, who have denounced the low prices paid for the product in plants.

Costa Rican company's project 'could raise milk prices in Nicaragua'

July 2008

Plans by Costa Rica's Dos Pinos Cooperative to build a US$6 million dairy products plant in Nicaragua could lead to higher milk prices there, Nicaraguan companies claim.

Besides Nicaragua, Dos Pinos is planning projects in Guatemala and Panama because Costa Rica's milk production is not growing fast enough to meet demand.

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