In January 2011, Google promised to do something against so-called “Content Farms” in a timely manner. At the time, these websites managed to get good rankings with their inferior quality content, which in turn displaced websites that might be much more useful to the user from the top positions.
“Content Farm” refers to websites that employ a large number of editors, who continiously produce new content for popular search requests and subjects. The quality of this content ranges from very good to superficial, that is to say bad.
It was soon noticed that this newly introduced Algorithm Update removed the very same low quality websites (Content Farms) from the search results or pushed them far towards the back.
Danny Sullivan, chief editor of the blog Search Engine Land, therefore called the Algorithm Update “Farmer Update”, which stuck as its name, at first.
As far as Google was concerned, the newly introduced Algorithm Update was not explicitly directed against “Content Farms” and they rejected the notion of giving an official name to Algorithm Updates.
One week after the introduction of the “Farmer Update”, Google published the internal name for the update in an interview – Panda. It has been referred to as the “Panda Update” ever since.
Sources on the subject worth reading.: