An empirical evaluation of policy options for inclusive dairy value chain development in Nicaragua: A system dynamics approach
This research in the Agricultural Systems Journal tested and evaluated the short-, medium-, and long-term impacts of specific interventions and policies in the Matiguás dairy value chain with the goal of strengthening the competitiveness and inclusion of small- and medium-scale producers. Achieving inclusive value chain development is a challenging task due to the complex and dynamic nature of interconnected value chains and their social, economic, and ecological dimensions. The interventions of this research centered on improving the feeding systems, which was identified by stakeholders as the critical constraint to competitiveness. The policy analysis reveals that both improved pastures and increased use of concentrates raise producer milk productivity by 5% and 11%, respectively in the long run, but are also expensive strategies for smallholder producers, leading to a reduction in profits relative to the baseline by 1% and 3%, respectively. Consequently, policymakers should identify strategies that help to reduce concentrate costs and support producers with investments in improved pasture, while also promoting training in pasture management skills. Indeed, in the long-run, model results reveal that investment and training in pasture management results in a 30% and 35% increase in milk production during the wet and dry season, respectively. Simulation results further highlighted that intensifying the feeding system to improve cow milk yields is mainly profitable in the long term, and thus requires a longer-term perspective by policymakers. The model provides a deeper understanding of the complex and dynamic nature of the Matiguás dairy value chain and the interactions between markets, coordination aspects, biophysical phenomena, and income. The system dynamics approach to value chain analysis further addresses a major analytical shortcoming in value chain analysis and provides decision makers with an improved platform for planning and policy formulation.