Presented by Rein van der Hoek (CIAT) at the CGIAR Research Program on Livestock and Fish Value Chain Development Team Meeting, Nairobi, 5-8 March 2012

1. Update on Dairy Value Chain development
in Nicaragua and Honduras
Rein van der Hoek (CIAT)
CGIAR Research Program on Livestock and Fish
Value Chain Development Team Meeting
Nairobi, 5-8 March 2012

2. Dairy Sector Nicaragua/Honduras
• Generates more than 250,000 direct jobs, 1,600,000 indirect jobs, 2%
GDP
• 70% of cattle farms produce milk, double purpose animals, 75% income
through milk
• 50% of farms < 5 ha, extensive systems (> 1 head/ha), low productivity
(3-5 kg/animal/day)
• Constraints in VC: high inter-seasonal variation milk production and low
milk quality
• Many farmer asociations/cooperatives, but ..
• Milk collection centers essential part of VC (be it small-scale)
• Dairy processing plants variable sizes
• Dairy products: limited variation, consumers prefer low prices over
quality
• Limited support from government, few incentives for innovations,
intensification

3. Why work on Dairy VC Nicaragua-Honduras
• Major sector, high potential but underdeveloped
• Increase cash flow for small producers
• Increase nutritional status (children)
• Reduce volatility of prices for dairy products
• Potential for high value dairy products
• Gradual trade liberalization: improve competitiveness,
develop differentiated high value products and to gain
market access both locally and with partner countries.
• Needs and opportunities for private investment
• Multiplier effects in dairy basins

4. Planned activities
• Improved forage, pasture and silvopastoral systems for higher
productivity and seasonal stability
• Improving milk quality/hygiene through better processing techniques
• Value chain analysis focusing on improving economic conditions at
producer level
• Facilitating integration of informal stakeholders (small farmers,
processors and traders) to more dynamic, differentiated markets
• Enhancement of partnerships around specific market opportunities
for the establishment of business models
• Capacity building including technological innovation, farm
management and linkage with service providers and industry
• Emphasizing the concept of eco-efficiency

5. Present state Dairy VC work Nicaragua/Honduras
• Diagnostics: information available for a large part, possible need
for some specific baseline work
• Production - Forages and feeding - on-going (> 10 years)
– Various germplasm materials integrated in farming systems of small
and medium farmers, different systems and uses
– Impact on milk production (farm level)
• Training and dissemination (government agencies, NGOs) - in
development
• Marketing aspects (niche markets, inclusion private sector) – in
development
• Proposal development, in collaboration with CIAT-CC people (link
to CRP 7), GIZ, local institutions, private sector
• Site selection – mainly depending on intervention sites (potential)
partners, potential integration other sectors

6. CRP3.7 Component 2.2/2.3 Dairy value chain Nicaragua /Honduras
MILESTONES PARTNERS Workplan activities (2012) Resources from
(OUTPUT TARGETS) restricted projects
Objective 1. Improving the competiveness market integration of dairy processors using adequate enterprise models
1.1 Identify good market GIZ, Private Sector Value chain diagnosis If CFC approved
opportunities for linkages between partners, National Identification of commercial around 2 millon USD
small dairy farmers, small dairy Institutions, contacts interested in linking with (including Colombia
enterprises and market oriented National and smallholder dairy producers component) for whole
dairy value chains (2012 or 2013). International NGOs proposal
1.2 Design and implement Conduct gap analysis to identify
technological and business upgrading needs Seed money for
upgrading processes between small Workshop between farmers, dairy proposal development
farmers, small dairy enterprises enterprises and buyers to establish
and commercial buyers (2012 or agreements for physical and process Other funds (NGOs,
2013). upgrading IDB, private partners)
1.3 Promote business and alliances Design sustainable trading
between small dairy farmers, small relationships
dairy enterprises and buyers
(2013/2014).
1.4 Document lessons learned and Build feedback loops among project
share emerging good practice participants
(2014/2015) Share lessons learned, with other
VC’s 3.7

7. Objective 2. Improving farm profitability, including farm management, forage based feeding, animal health, milk
hygiene and on farm environmental issues
MILESTONES (OUTPUT TARGETS) PARTNERS Workplan activities (2012) Resources from
restricted projects
2.1 Improve farm productivity GIZ, Private Sector Reviews If CFC approved
through activities related to animal partners, National Workshops around 2 millon USD
feed, health, and management. Institutions (including Colombia
2.2 Improve and promote the quality Reviews component) for whole
of milk produced on farms and Workshops proposal
collection points (2014/2015).
2.3 Strengthen the managerial Reviews Seed money for
capacity of small dairy farmer Workshops proposal
associations, small dairy enterprises development
and selected dairy clusters.
(2014/2015). Other funds (NGOs,
IDB private partners)
2.4 To prevent or mitigate on-farm Proposal development with
environmental deterioration (2013 partners, some pilot work
onwards) (Farmer) workshops
2.5 Reduce carbon footprint through Proposal development with
identification and implementation of partners and private sector,
“best practices”, “carbon-insetting” some pilot work
(2013 onwards) (Farmer) workshops

8. Objective 3. Improving dairy product quality, including attention to food safety issues
MILESTONES (OUTPUT TARGETS) PARTNERS Workplan activities (2012) Resources from
restricted projects
3.1 To develop products with GIZ, Private Sector Reviews on product If CFC approved
potential in the market, feasible to partners, National development around 2 millon USD
produce in the local environment Institutions (including Colombia
(2014/2015). component) for whole
3.2 To develop a synchronized and Reviews - Improving quality proposal
continuous quality control system from farm gate to consumer
along milk/dairy value chains Enhancing Food safety Seed money for
(2014/2015) (traceability, regulations proposal
compliance) development
Other funds (NGOs,
IDB private partners)