By DR. BERNARDO M. VILLEGAS
Dr. Bernardo M. Villegas
Dairy farming for profit is obviously not for the poorest of the poor. The availability of land and the relatively small land holding per farmer means that growth of the dairy industry will require dairying to be a competitive land use option. In pasture-based systems, many areas with land physically and environmentally suitable for dairy production, dairy farming will have to be proved more profitable than other land use options such as small-scale sugar cane or corn production. Forage production using corn will also have to demonstrate that it is more profitable than grain based on corn production.
The feed requirement for 100,000 cows plus replacement young stock is approximately 600,000 tons of dry matter. If all this were to be sourced from corn-based diets, approximately 30,000 of hectares of corn for forage would be required each year. Even medium-sized dairy herds of 30 cows and six hectares of developed pasture capable of delivering 60% of the diet from pasture would require at least 50 tons of corn silage each year to enable farmers to adequately feed cows. Since corn farmers are among the poorest among rural dwellers, the growth of the dairy industry will indirectly favor these farmers who can provide at least a small part of the requirements especially of confined intensive dairy farming systems that have to rely on corn-forage diets. As a poverty alleviation program, two major activities are recommended:
Identify and contract smallholder corn and sugar producers within a district capable of implementing forage production for corn-based diets of cattle.
Develop, monitor, and evaluate the productivity and profitability of specialist bull beef and heifer grow-out production systems and promote profitable schemes as income generating opportunity for farmers with limited access to land.
The NDA and its donor partners are expected to assist in data collection and analysis from selected farms to evaluate the profitability, risk profile, and sustainability of farming systems that support expansion of dairy production systems.
Another strategy that can help farmers at the bottom of the income scale is the promotion of artisanal processing opportunities. While the dairy hub concept and strong milk sourcing strategies are key for larger processors, there are many small producers often a long way from processing facilities and large markets. They produce low volumes of milk on a daily basis and the cost of transport and risk of contamination are both high. In outlying areas, small local farmers and entrepreneurs need processing skills to capture small local markets. Although support to establish small-scale artisanal processing businesses will not have a major impact on the total volume of milk processed, value adding at the artisanal level will make farmers with 5 to 10 cows in more remote areas profitable. It will also generate employment opportunities, thus benefiting landless rural workers.
There are already a number of plans to implement small-scale local processing facilities targeting local markets but the competencies for safe milk processing and milk products will need much assistance from the government, private business (through CSR programs) and civil society. In addition to pasteurized milk, artisanal processor could diversify into products such as soft and hard cheese, pastilles, yoghurt, butter, and ice cream. The same can be said for milk that can be obtained from carabaos and goats.
For the rural poor to benefit from the employment-generating effects of an economically viable dairy industry, a very critical investment must be made by private investors in cold chains. The quality of milk deteriorates very quickly if not cooled as soon as possible after milking. Milk chillers, village or district milk collection centers, refrigerated transport, etc., are among the range of options available to groups of suppliers, co-operatives, and processors, to cool the milk quickly and maintain the milk at those temperatures. Investing in cold chains is a good example of what is called impact investment because of its socio-economic benefits to small farmers and landless rural workers who will be enabled to participate in the supply chain of milk production. The potential to benefit from such an investment would be greater if more milk was available. Selected processors with the potential to source large milk volumes relatively close to processing facilities will be encouraged to develop a milk sourcing strategy which will include:
-- Daily milk collection systems, either by individual farmer delivery or collection by processor-operated milk tankers.
-- Establishment of practical milk cooling systems on farms prior to collection.
-- Cooling systems along the supply chain including at collection centers and during transport.
Investment in such systems could be a collective effort of existing processors on a cost-sharing basis and, because of its impact on the small farmers and landless rural workers, may actually attract official development assistance funding from countries like the US, New Zealand, Canada, and the Netherlands.
(To be continued)