Supporting the development of a self-sufficient dairy sector in Panama

The challenge/background

Dairy and its derivatives have historically been fundamental pillars of food security in Panama. The annual milk production in the country is approximately 180 million liters and the demand is 480 million liters of milk annually between fluid milk, various national milk products and imported dairy products.  The per capita consumption is 120 liters.  Milk powder import is about 1,980 metric tons per year.

Milk is classified according to its quality in Grade A, B and C.  Grade-A for top quality down to Grade-C  being the lowest quality in terms of its bacteriological and compositional quality.  The dairy sector has traditionally been supported with subsidies, specifically smallholder farmers.  However, due to rising input costs and inefficiencies in production and farm management, dairy farmers struggle to increase their incomes.  Local milk production has had a downward trend since 1999.  Milk production average yields are low with 3.8 L/cow/day and there are around 400 medium and smallholder farms.  

The initiative – introducing the Dairy Hub model

To support the development of a more self-sufficient dairy sector, Tetra Pak customer and dairy processor Industrias Lácteas, S.A. with the support from Tetra Pak and Tetra Pak Food for Development, has introducing the Dairy Hub model.

The Dairy Hub model links smallholder farmers to a more stable market through a committed dairy processor willing to invest in the milk supply chain. Through the Dairy Hub, the farmers have access to a secure market for their milk, as well as a training programme and assistance necessary to increase income and profitability of the farms.  Training and technical assistance is provided by a team of Extension Officers, who are a team of local agriculture technicians focused on providing knowledge transfer to the smallholder farming community.  The Extension Officers receive technical training and hands-on support from Tetra Pak Food for Development Dairy Experts.

The knowledge transfer from the Dairy Experts to the Extension team uses the “Training the Trainers” methodology.   The Extension team will be responsible for providing training and advisory services on farm management, feed and feed additives, forage and maize seeds, animal health and veterinary services.

Currently, INDUSTRIAS LÁCTEAS S.A, collects approximately 110,000 liters/day of raw milk from about 230 farmers.  The project partnership started in April 2022 and will be implemented during a period of 12 months.  It involves 57 reference farms in the first phase in order showcase initial productivity results to other farms.  In phase two, the reference farms will host group trainings for the rest of 173 farms participating in the project to ensure farmers are receiving the necessary competence to improve their milk production volumes and quality.  As the project grows, a wider community of farmers which are involved in the project will also receive training.

The objectives are:

• 10% increase the collection of raw milk.
• Minimum 20% improved milk production per farm.
• At least 20% improved farmer income from milk sales.
• 30% of the smallholder farmers will reach grade A-level (highest quality) by improved milk quality.

The value/results – increased milk collection and average gross smallholder farmer income

There have been improvements already in the first few months of the project in 2022, where milk collection increased 8.5 per cent, from 106,000 to 115,000 litres per day.  The reference farms also improved milk yield per farm about 4.4 per cent, and the average smallholder farmer gross income increased 4.2 per cent compared to before the hub.

“We have followed-up on the improved management recommendations given by the advisory team of Estrella Azul towards a more efficient production including: Record keeping, management of the prepartum cows, management of the calf at birth, herd health, nutrition, among others of great contribution for productive and reproductive management.

In this way, I am very thankful with Estrella Azul and partners for their interest and contributing to our continuous improvement as dairy farmers in the Dairy Hub project, and for all the knowledge shared with us by the Food for Development specialist, through their technical visits, conversation and sharing experiences with other farmers. This has allowed us to achieve a more stable production. There are still many things to improve, and next step will be to have water available for all animals 24/7 and calculate our average milk production cost for the future”, states Faustino Gonzalez, Dairy Farmer, Estrella Azul.

Looking ahead

An efficient collection of quality milk, collection infrastructure including cooling tanks, milk quality control equipment, milk trucks/tanks and milk reception equipment are in place.  After 12 months of intensive trainings and sharing of knowledge, the Extension team will have a solid background to provide advice to smallholder farmers.  The reference farmers will be ready to host group trainings for a larger number of farmers, to show best practices and improve milk production efficiency and continue to share best practices.