Long-Term Dairy Partnership With Danone Helps Producers – and the Environment
A decade-long project in Mexico shows how climate-friendly practices make good business sense for small-scale producers
Jaime Cortés runs a dairy farm with his father in Jalisco, Mexico. He’s one of the small-scale producers that supplies nearly half of the country’s milk.
Jaime loves the work, but it’s not an easy career. Small-scale producers like him often struggle to escape poverty, contending with unreliable markets and, increasingly, the effects of climate change.
Jaime was getting by until 2014, when the dairy’s main buyer decided to take his business elsewhere. Despite years of hard work, it nearly ground the family’s business to a halt.
“It was tough for us,” Jaime admits. “What were we going to do with the milk?”
A New Approach to Sustainable Profits
Many small-scale dairy producers like Jaime face similar challenges: poor production practices; not enough reliable buyers; rising input prices; and environmental unsustainability.
Jaime, for instance, didn’t have the funding or the credit to buy enough food for his cows. And without business training, he wasn’t even sure if his dairy enterprise was making a profit.
In 2010, TechnoServe partnered with the global food company Danone’s Ecosystem Fund as well as UNAM (Universidad Nacional Autónoma de México) on the Margarita Project. Over this decade-plus partnership, TechnoServe has helped more than 500 dairy farmers to improve their incomes through more productive, sustainable dairy farming practices and better business management.
The project also connects farmers with financing to invest in more cattle, as well as equipment like milking machines and cooling tanks, which improve milk quality. In addition, farmers receive training on quality standards, and are advised by veterinarians on better breeding, hygiene, animal health, and nutrition skills.
Margarita is the only project in the area providing producers with a stable marketing channel, technical assistance, attractive financing, and a guaranteed buyer. To make all of these elements work, TechnoServe had to align business and social incentives across Mexico’s dairy supply chain.
“Bringing private and public partners to the same table has allowed us to make sure that the cost of developing hundreds of producers was not a limiting obstacle,” explains TechnoServe Project and M&E Manager Adriana Abardia.
Climate-Friendly Practices that Benefit Farmers
Environmental sustainability is also a key part of the program. Mexico now faces climate change challenges like water shortages, rising temperatures, and lower yields. So TechnoServe–working with local NGO Nuup–is applying a regenerative business approach to this program, aiming to rejuvenate, rather than degrade, nature, so that people and markets can prosper in the long term.
More than half the farmers are now implementing some form of carbon sequestration–capturing and storing harmful carbon dioxide emissions. And farmers also learn regenerative practices like:
- Installing solar panels to use renewable energy
- Cattle diet changes to include locally sourced food that also results in less methane
- Improve cattle feed productivity per hectare so less land is needed
- More efficient water management systems
- Limited pesticide use
- Reforestation of land
Jaime and his father, Don Jaime Cortés, were astonished to learn the new techniques. “We knew how to do things [before], but more traditionally and by habit,” says Don Jaime. “By having the opportunity to join the program, we have been trained and have learned how to do things better.”
With guidance from TechnoServe, the Corteses installed solar panels on their roof–an investment that reduces energy-related emissions but also benefits them financially.
“We haven’t paid an electric bill in four years,” says Jaime.
Such economic incentives to reduce emissions have encouraged farmers to take up these environmentally practices. As a result, the carbon emissions produced by farmers in the program has decreased by 13% in two years.
Long-Term Impact for Small-Scale Producers
As dairy farmers like the Cortés family meet higher quality standards, they can sell their milk at better prices to more reliable buyers. One of those buyers is Danone itself, which started sourcing milk from these farmers as a result of the project. The company now buys 24% of its milk in Mexico from these small-scale producers.
“With about 500 farmers we’ve been working with for a decade, the average increase in the amount of money they take home from their dairy business has increased by 2.7 times,” says TechnoServe Director of Strategic Initiatives Jonathan Barnow. “That’s nearly three times what they were making from their business. And that’s on average.”
There are even some farmers who have gotten that increase to seven times what they were making before the program.
Jaime and his father worked with TechnoServe to apply productivity and regenerative improvements to their farm. They then started selling their milk to Danone, a reliable buyer that pays them good prices.
“We’re putting less carbon into the environment, and people are making more money.”
– Jonny Barnow, TechnoServe
In 2016, the Cortéses were able to buy their first tractor and mixer trailer, which helped them save time feeding the cows and reduced bovine health issues by creating better, mixed feed.
“With the tractor, [feeding the cows] went down to three hours,” says Jaime. This is almost half of the time required before.
Looking to the Future
The Cortés family continues to make improvements that combine technology and agriculture to keep the cows healthy. An IDBLab-funded initiative helped them adopt smart collars, for example, which provide real-time data and health alerts for the cows.
The focus now for the father-and-son farmers is to grow their business sustainably, increase their resilience to climate change, and further improve their agricultural practices.
“Margarita is a very good social program for small producers like me,” Jaime Cortés reflects. “With this kind of project, you secure your future and your well-being.”
