Competitiveness of Milk Production in Nicaragua: An analysis of Productivity and Costs in Dual-Purpose Livestock Systems in the Matagalpa Region

Abstract

This paper analyzed the productivity, economic results and milk production costs of dual-purpose livestock production systems located in the department of Matagalpa, in the central region of Nicaragua. Farm data were obtained from one-day interviews designed originally to be used for internal evaluation purposes for an agricultural development project. A total of 124 observations were collected on farm structure, sales, inputs and labor use, and stock of cattle. Only the pastoral (livestock) portion of the farm, which represented 83% of the land, was used for the analysis. For the purpose of organizing the data, they were divided into quartiles. It was found that the smaller farms used the land more intensively, and more productively. On the contrary, larger farms were characterized by higher productivities of their scarce resource, labor, in both cases, an indication of allocative efficiency. The family farm income, obtained after deducting cash expenses and depreciation from total receipts, was about 10 US$ per day and per person of family labor. The average shortrun cost of milk production was 0.071 US$/L for the whole sample, while the average long-run cost was 0.236 US$/L. There was a strong negative relationship between cost of production and land productivity.