Small dairy producers have increased their income per liter by 13%  selling directly fresh and good quality milk to “anchor firms”

In the Northern Ecuadorian provinces of Imbabura and Carchi, many rural families live off dairy farming. For years, these small farmers, with no more than 20 cows, could not directly access the markets to sell milk at fair prices.  Traditionally, they used to sell the milk to intemediaries who imposed the price and paid less for the product, as well as not paying on time.  The hard work of these small producers was not reflected in income and profits, and thus they could not improve their living conditions.  Over the past nine months, USAID has been supporting several value-chains for micro, small, and medium sized producers in the agricultural, agroindustry, industrial and eco-tourism sectors.  The dairy industry is one of the supported sectors. Before USAID’s involvement, small producers had never received technical assistance and training on new technology and procedures to improve the quality of their products.

USAID efforts to create value-chains and facilitate linkages among chain members will improve their capacity to enter international markets through the application of modern technology and marketing practices.    The assistance to the dairy sector began in October 2007 with the participation of two important anchor firms, Industria Lechera Floralp S.A. in Imbabura and Industria Lechera Carchi S.A. in Carchi.  These firms signed an agreement with four local small producer associations, which bring together 190 micro and small dairy producers.  With $165,000, USAID provided dairy equipment to the associations and trained the small producers in pasture and cattle management, cattle nutrition, and most importantly, cold chain management. In addition, USAID provided technical assistance to the anchor firms to improve product design and quality, improve production processes, mitigate environmental impact and improve environmental management, strengthen financial and administrative management, and improve marketing and access to markets. 

This joint effort has already begun to bear fruits quickly.  The small dairy producers are directly selling fresh, high quality milk to both anchor firms.  As a result, their income per liter increased from a baseline of $0.28 in October to $0.31 in March, a 13% improvement.  Also, the project encouraged the four associations to formalize their structure.  To date, they have increased their membership to 90 additional producers.  Currently, 252 small producers are participating and benefiting from this initiative.  “We are very proud.  Our dreams have come true, we will sell our product to two large companies, increasing our income and improving the living conditions of many families in this area” said Saúl Paspuezán, president of one of the small producers associations.