Liconsa Halts Milk Purchases in Aguascalientes Due to Budget Constraints

The Mexican dairy sector is facing uncertainty following Liconsa's announcement to halt milk purchases in Aguascalientes for December. This decision, driven by a lack of available budget, is part of the company's strategy to close the fiscal year. Liconsa, responsible for the 'Leche para el Bienestar' program, acts as a price regulator, and its purchase suspension has heightened concerns among market analysts about the economic viability of local dairy operations.

The suspension directly affects Aguascalientes, one of Mexico's main dairy regions, where farmers rely heavily on Liconsa's guaranteed pricing to cover production costs. Without their main buyer during a critical month, producers must find alternative markets, such as the open market or private industry, which historically offer lower prices than the social program.

This sudden reduction in institutional demand could lead to an immediate oversupply of raw milk in both regional and national markets, potentially driving down reference prices and affecting farm liquidity at a crucial time of the year. Liconsa's purchase program is vital for economic stability in the primary sector, highlighting a need for budget restructuring to support social supply programs.

Local dairy association leaders have expressed serious concern, describing the budget cut as a threat to the survival of small and medium-sized producers. They urge federal authorities to address the deficit and resume milk purchases, emphasizing that dairy production cannot be halted. Trust in government institutions as reliable buyers is being questioned due to such last-minute decisions.