The objectives were to: (1) identify and quantify the effect of technological change on productivity, profitability, and competitiveness in different milk production systems and regions of the country; (2) analyze the relationship between productivity, technological change, profitability, and competitiveness; (3) analyze the evolution of milk production systems in Colombia; and (4) discuss the market concentration and its impact on the formation of milk price. Data came from a survey to 545 farms during the year 2000 in five regions: Caribbean and Piedmont in the lowlands, Coffee Growing, Antioquia, and the Cundiboyacense altiplanicie in the highlands. The survey was designed to quantify inputs and products in order to determine costs and prices at the farm level in order to calculate (a) variable costs for feed supplementation, labor, health, reproduction, fertilization, and irrigation; (b) gross income from the sale of milk and beef, and (c) to characterize farms according to productivity level and management practices. The statistical analysis of multiple correspondence and general linear models were used to explain the variability observed between productivity and profitability as a function of technological change. Independent of the production system or the region where farms were located, the increase in competitiveness was in direct relationship with herd size. Thus, as herd size increased, production costs per unit of milk and beef decreased, net incomes per cow increased, and the return to capital investment improved. However, when this increase in competitiveness was associated with increases in productivity, this trend was not observed, which suggested that highly productive farms were not necessarily competitive. The dual-purpose system was the most profitable one in the Piedmont, Caribbean, and Coffee growing regions while in Antioquia and in the Cundiboyacense altiplanicie the most profitable was the specialized dairy system. With regards to technological change, the adoption of improved pastures and the investment in pasture divisions for a more efficient rotation generated higher productivity and income in all regions and production systems, as well as increased competitiveness through a reduction in production costs per unit of milk and beef. The use of strategic feed supplementation to the basal diet of forage had mixed effects. The best economic response to this supplementation in lowland regions (i.e., Piedmont and Caribbean) was with low quantities (i.e., < 0.5 kg DM/cow/day) of feed supplements while in highland regions (i.e., Coffee Growing area, Antioquia and the Cundiboyacense altiplanicie) was with moderate quantities (i.e., between 0.5 and 2 kg DM/cow/day). The use of fertilization and irrigation increased productivity, but reduced net income and increased production costs, except in the Cundiboyacense altiplanicie. The practice of milking twice a day increased both productivity and profitability and reduced production costs, except in the Caribbeanregion. Farms that de-wormed milking cows with low frequency against internal and external parasites obtained higher incomes and lower production costs in comparison with farms that de-wormed cows with higher frequency although there were no differences in productivity. The amount of years of experience of farmers at producing milk was a key factor to increase profits, although not productivity. Farms located in sites where the commercial value of land was high (>US$6,000/ha) and near market centers had higher productivity that those with commercial value of land medium ($3,000 to $6,000/ha) and low (<$3,000/ha) but were less profitable in all regions. Box 1: Recommendations to researchers and extensionists Identify profitable technologies. Technologies that increase productivity are not necessarily profitable, which suggest the need to determine appropriate ways to evaluate them economically. This was the case of fertilization and irrigation. It is necessary to determine the best economic response to various levels of N2 and H2O to different species of improved grasses under various soil types and conditions. The most competitive and profitable breed group in the dual-purpose system was the crossbred with low (24% European-76% Zebu genes) and medium levels of dairy genes (55% European-45% Zebu genes) but had lower productivity than the purebred group (98% European genes). In the specialized dairy system, the purebred group was slightly more profitable, productive and competitive than the crossbred group with medium level of dairy genes, but this difference was not significant. The Colombian dairy sector has become more productive and competitive, but less profitable. Comparing the evolution of dairy farms with studies 12 years ago, milk production per hectare increased by 44% in dual-purpose herds and 14% in specialized dairies. This increase in productivity reduced the milk production cost by 16% and 10% in dual-purpose and specialized dairies, respectively, due to an increase in stocking rate by 15% and 17% in dual-purpose and specialized dairies as well as to an increase in investment in infrastructure and equipment by 258% and 37% in dual-purpose and specialized dairies, respectively. However, the net income per hectare during this period decreased by 27% and 69% in dual-purpose and specialized dairies due to a reduction in the producer's price of milk and beef of 22% and 20% in dual-purpose systems, and of 41% and 27% in specialized dairies. Nevertheless, this reduction in price to producers was never translated in lower prices to consumers, but remained in the hands of supermarkets and milk processing plants which expanded and modernized with long-life technology. Development agencies must internalize the fact that policies oriented to markets will be increasingly "oriented to supermarkets". If one adds that in Colombia exists 3 or 4 supermarket chains that control the food retail market, the conclusion is that sectoral policies will need to learn how to deal with a handful of giant companies. This in a huge challenge, and demands an urgent review of ideas and strategies. Box 2: Recommendations to decision makers Regionalize research. Due to the fact that the most profitable production systems are region-specific, Colombia should have different strategies for research and technology transfer in order to exploit more efficiently the comparative advantages of each region and production system. Promote collective action. It is necessary to promote cooperatives and associations to help small producers to adapt to new patterns with higher levels of competition. Otherwise, the new rules of the game could induce a massive exodus of producers in the short term and in a relatively brief period of time. It is possible, in the short run, to adopt technologies that increase milk productivity and reduce production costs while profits are reduced as a result of falling real prices as occurred in Colombia during the 90's. However, in the long run, this situation is simply unsustainable. The proposals and challenges presented in this case study have illustrated the problems and opportunities of the dairy sector in Colombia. However, these systems could represent similar situations in other countries of Latin America. Given the phenomenon of globalization and higher degree of efficiency that these systems are being exposed to, the issues of productivity, technological change, competitiveness, and markets, are critical and of enormous relevance for the performance and survival of the livestock sector in the next decades. Box 3: Recommendations to producers Without research there is no future. Efficiency goes hand in hand with technology and this depends on research and technology transfer. However, public funds allocated to agricultural research are being reduced. The challenge consists that producers in Colombia take greater control of livestock research by building alliances with local, regional and international organizations leaders in forage and livestock research. For this it is necessary that producers define and fund their own research agenda. Production-to-consumption participation. In the coming years, producers cannot limit themselves to participate only in the primary phase of production, but to expand their scope of action to other phases of the market chain to have a higher participation in the formation of milk prices and to capture a greater piece of the final price.

The early adoption of the legume Arachis pintoi was studied in the State of Caquetá, located in Colombia’s Amazon region. Data came from 174 farmers randomly surveyed within the area of influence of Nestlé, a multinational milk-processing company. In addition, 52 farmers who had already adopted Arachis were surveyed separately to study their experiences, difficulties, and prospects with the legume. Results indicated that livestock activity is undergoing dynamic intensification. Since 1986, milk production per lactation has increased by 31%, cow fertility by 5%, herd size by 18%, and the area sown to improved pastures by 165%. Current adoption rate of Arachis is about 9.2%, with an estimated 3000 ha already planted. Two-thirds of farmers who had adopted Arachis said they would double, in the next year, the average area sown (9.6 ha/farm). Adopters tended to have larger farms and to have invested twice the capital than did non-adopters. The cost of seed for both grass and legume accounted for 40-52% of total establishment costs, making seed quality decisive in guaranteeing success. To promote Arachis, more information on the plant and its management in association with grasses must be disseminated. Mechanisms should also be sought to reduce establishment costs.

Smallholders with dual-purpose cattle production systems in most Central America experience a shortage of forages during the dry season (4-8 month. As a result, substantially lower milk production and weight gain occurs. Dual-purpose operations seeking to maximize milk and beef production in the dry season can produce and feed hay or silage to their livestock. The increase in milk and beef production due to feeding hay or silage during the dry season on commercial dual-purpose cattle productions systems, the production costs of making silage or hay and the benefits as a result of feeding silage or hay are estimated and compared in Honduras and Costa Rica. Due to feeding silage or hay, farmers in Honduras and Costa Rica have increased milk production during the dry season. The costs of feeding hay are lower in both countries, although farmers feed a higher amount (kg DM/cow/day) than silage. Feeding silage or hay to milking cows is profitable in both countries. The income-cost ratio and the net benefit ($/cow/day) due to feeding these feedstuffs are positive. Farmers with milking cows in Honduras realise a higher income-cost ratio and net benefit due to feeding silage and hay than farmers in Costa Rica. Likewise, beef cows or young livestock supplemented with these feeding alternatives don't loose weight during the dry season. In Honduras as well in Costa Rica, it is profitable to feed silage or hay to beef cows or young livestock. Currently, no silage and a small hay market exist in Honduras. Possibly, these will develop due to an increasing demand for these profitable feedstuffs. In Costa Rica thanks to the efforts of agricultural organisations, a hay market of different qualities is developing.

Livestock production plays a key role in tropical Latin America in a changing economic environment. This study focuses on documenting the transformations of extensive production systems by using superior forage germplasm supplied by regional research systems. The adoption of improved Brachiaria grasses was evaluated from 1990 to 2003 to estimate its impact in terms of animal productivity and income in Central America and Mexico. Information on seed sales in the local market made it possible to estimate the areas planted and the value of additional milk and beef production attributable to adoption. Mexico presents the highest volume of marketed seed and of area established with improved pastures. Among Central America countries, Costa Rica was outstanding in terms of the high volume of seed sold and the area planted, followed by Honduras, Nicaragua, and Panama. The annual growth rate of seed sales was very high during the study period, reaching 32% in Mexico, 62% in Honduras, 45% in Nicaragua, 39% in Costa Rica, and 54% in Panama. The area planted with Brachiaria species during this period totaled 6.5% of the total surface of permanent grasses in Mexico, 12.5% in Honduras, 1.0% in Nicaragua, 18.7% in Costa Rica, and 0.1% in Panama. Excluding Nicaragua and Panama, where adoption is low, Brachiaria grasses account for 24%-55% of total annual milk production and for 5%-18% that of beef. These figures clearly demonstrate that those adopting new Brachiaria cultivars are farmers mainly oriented toward milk production and, to a lesser extent, beef. In monetary terms, the value of additional production attributable to the adoption of Brachiaria grasses in the selected study countries was estimated at US$1084 million per year, 78% corresponding to milk and 22% to beef. Due to the magnitude of the livestock sector in Mexico, adoption generates slightly more than 80% of production profits. Study results indicate that the investment of public funds in Central America and Mexico to support the International Network for Evaluation Tropical Pastures (RIEPT, its acronym in Spanish) paid off in terms of adoption of improved grasses and significant increases in the supply of milk and beef, fundamental items in the diet of consumers from all income levels in the region.

Objectives of this study were to compare costs and expected benefits of feed supplementation in cattle with alternative shrub legumes during the dry season using as a case study the hillsides of Central Nicaragua. The information used was gathered in a survey of 32 farms in the states of Boaco and Chontales in Central Nicaragua. The survey was designed to determine herd structure, land use patterns, milk and beef production, and use of inputs for animal nutrition, in order to estimate production, reproductive parameters and employment of family/contracted labor, as well as indicators of profitability of the alternatives under study. To calculate the economic return to the investment in alternative forages, a simulation model that applies optimization techniques through linear programming, implemented as a spreadsheet, was used to perform an ex ante evaluation of the costs and benefits of different land use alternatives and of interactions between technological components and biological productivity. The model compares the costs and benefits of the traditional feeding system versus an improved feeding system. The traditional system consists of grazing naturalized pastures (Hyparrhenia rufa) during the rainy season. In the dry season producers supplement the herd with small areas of king grass (Pennisetum spp.). The improved feeding system consists of establishing forage legumes for dry season feeding as a supplement to replace king grass during the dry season. Supplements to evaluate are the shrub legume Calliandra calothyrsus as partial replacement of the herbaceous high quality legume Vigna unguiculata, commonly known as Cowpea. Under the new feeding system, herd size can be increased by 60% due in part to the increase in stocking rate as well as to the increase in the quality of the diet offered with higher protein content. This increase in herd size raises both milk and beef output that generates an increase in farm income by 1.8 times more (i.e., from $1,314/farm/yr to $2,386). The economic return to family labor is increased by 20% to $ 5.26/day equivalent to 2.3 times higher than the local wage rate. The adoption of Vigna (Cowpea) after the harvest of maize/beans and a shrub legume as Calliandra to replace king grass seem to have the potential to significantly improve the productivity in smallholder farms. with the resulting increase in the economic return to family labor.