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.

The objectives of this study were to (1) describe the economic agents of the chain and their commercial and legal relationships; (2) identify the articulations between links, technological levels, indicators of efficiency, installed capacity (scale), and degrees of occupation; (3) characterize and estimate the costing and pricing structures, and the generation of value in different links of the chain; (4) identify those critical costs that can be modified through technological interventions, policy, or other activity; (5) determine the biological and economic risk factors throughout the chain; and (6) develop a methodology to identify and estimate the costs and benefits in each segment and evaluate the generation of value throughout the beef chain. Data at the farm level was obtained from a national livestock survey (CORFOGA 2005b), which provided data on production systems, inventories, productivity, culling, and labor. In addition, surveys were carried out in different segments: (1) auction houses, (2) slaughterhouses, (3) butcher shops, and (4) supermarkets. The aim of these surveys was to describe behavior, determine risks and costs, and identify problems. The weak dynamics of livestock production in Costa Rica are reflected in unsatisfactory productivity indicators. The annual gross income was estimated as US$44/ha for cow-calf operations, $126/ha for dual purpose (including income from milk sales), and $135/ha for fattening activities. Such income rates are considered extremely low, if one uses as reference the commercial value of land allocated to livestock production (ranging between $1000 and $2000/ha). The aforementioned biological inefficiencies, combined with high land costs, impede the recovery of opportunity costs for the capital invested in land, thus making beef production uncompetitive. The cow-calf operation, with its low productivity, remunerates family labor with wages below the legal minimum. On the assumption that the only cash cost is that of labor, cow-calf farms pay family workers at a wage that is equivalent to 60% of the legal minimum. Auctions present relatively good profits per event. However, when these profits are analyzed on a calendar-day basis, they are unattractive because of the low use of installed capacity. One strategy that would usefully improve the efficiency of the auction system in Costa Rica is its integration to reduce the number of fixed operational costs or encourage sharing of these houses so that administrative and operational personnel are rotated among the several existing auctions, taking advantage of the fact that they differ in their days of operation. This scheme would help reduce fixed costs and the commission collected without affecting profits, thus improving efficiency in this link of the chain. However, this option is not easy to implement, as auctions are run by private operators, whose various interests do not always coincide. The industrial sector formed by rural and industrial slaughterhouses shows a low occupation of installed capacity, resulting in high operational costs and low labor efficiency. The total operational costs of slaughtering and dressing are estimated as being between US$32 and $66 per animal. If the estimated unit costs are compared with the rates charged per slaughtered animal (between $15 and $23), then we have to conclude that rural slaughterhouses work at a loss and that industrial slaughterhouses cover their operational costs with processing services and the very small profit margins from sales of byproducts. The best performance in terms of efficiency and profitability is found in the retail sector of butchers and supermarkets. The rate of profits, expressed as the fraction of the final price paid by the consumer that remains in the butcher’s hands as remuneration of his work, ranges widely between 3% and 40%, with an average of 32%. If these profit rates are compared with those of other retail businesses, which are about 8%, then this type of activity presents excellent profit margins with relatively low risk. If, in addition, we take into account that this sector also offers the consumer a broad range of meat cuts from other animals such as pork and chicken, and processed meats, then profit margins are still higher. The value generated throughout the chain, as a percentage of the final value of the young steer at retail price according to activity, is distributed as follows: fattener (34%), retailer (33%), breeder (19%), slaughterhouse (7%), transporter (6%), and auction house (1%). As observed, the distribution of value throughout the beef chain is totally inequitable and incongruent with the level of individual risk confronted by the actors who form it. The inequity observed in the distribution of added value reflects a clear dominant position in the market of some actors of the chain, which enables them to capture a very high fraction of the profits. The value generated in the chain, adjusted for operational time in each link, ranges between US$0.28/animal per day for the breeder and $45.85/animal per day for the butcher. Thus, the highest proportion of the total added value concentrates on the final link of the chain. The butcher or supermarket obtains, on the basis of one animal in the same unit of time, 164 times more value that the breeder located in the first link of the chain. The latter has to confront biological and economic risks not covered by insurance policies, whereas retailers may mitigate risks through insurance policies for their raw materials, equipment, and infrastructure. The competitiveness of the beef chain is the aggregate of the efficiency and productivity of all the links that form it. In a situation where, in the final segment, the demand for beef is low and weakly dynamic, then economic signs of modernization and the technological change it promotes, are not being generated in other components of the chain, particularly in the first link of production. This, in turn, results in a vicious cycle, generating low productivity and lack of competitiveness. To promote technological change, efficiency, and competitiveness in the value chain for beef in Costa Rica, we propose the following six recommendations: 1. That successful experiences of other chains such as that of poultry be analyzed and learned from to identify strategies that would increase the efficiency of the beef chain as a whole. 2. That strategies for promoting the milk production of breeding cows be developed to increase family income, as remuneration of labor is currently below the minimum wage. This option would be viable only in localities where a milk market exists. That livestock producer funds [a livestock producer fund consists of granting livestock in company to produce meat, provided that the producer concerned has adequate pastures for this purpose on his farm] be created as mechanisms to develop social capital, reduce transaction costs, and help improve the chain’s productivity and profitability. These organizations would bring together the different classes of the chain and favor synergies in the interaction of public and private actors. 3. That incentives be created to promote the large-scale adoption of already available improved forage species, as most of the problem of low livestock productivity originates in poor and deficient feed. This strategy would emphasize feeding during dry seasons, thereby minimizing seasonal weight losses in the national herd and improving the profitability of farms. 4. That a carcass classification system be established, based on quality and price that would permit differentiating supplies for different segments of the market. 5. That consumer education be promoted on the health benefits of beef, forms of preparation, and differentiating between cuts, uses, and qualities of beef products.

The objective was to perform an ex-ante economic evaluation of new, legume-based forage alternatives available to farmers in Latin American tropical lowlands. These alternatives included grasses of the Brachiaria genus and the legumes Stylosanthes guianensis, Cratylia argentea, and Arachis pintoi. Case studies, involving farmers participating in the CIAT-led Tropileche Consortia convened by ILRI, were conducted in the forest margins of Pucallpa (Peru) and in the hillsides of the dry tropics of Esparza (Costa Rica) and Esquipulas (Nicaragua). A linear programming farm model developed by CIAT to maximize income was used for this analysis. Animal management parameters were based on farm averages at each reference site evaluated so that they represented current management conditions. Similarly, the model incorporated the prices of inputs and products typical of each country. A constant herd size was assumed for all alternatives evaluated. Production costs per kilogram of milk were estimated as the maximum expression of competitiveness, using three cow productivity parameters: the current average production per lactation (800 kg in Peru, 1,000 kg in Nicaragua, and 1,350 kg in Costa Rica); and two postulated parameters: 1,500 kg/lactation and 2,000 kg/lactation. For all forage options, key factors analyzed were (1) milk production costs resulting from implementing each forage alternative; (2) the investment required to establish each option, assuming the same number of milking cows and herd fertility; (3) the feasibility of obtaining credit with a local bank to invest in a forage alternative; and (4) the percentage of pasture area on the farm freed for other uses as a result of establishing one of the forage alternatives. Results indicated that the forage alternatives evaluated significantly improved the competitiveness of dual purpose farms in the hillsides of Nicaragua and Costa Rica, reducing the cost of producing milk between 13% and 37% with increased stocking rates, releasing up to 36% of area allocated to pastures. However, under current commercial banking conditions (real interest rates of 13% in Costa Rica and 18% in Nicaragua with payback periods of 5 years), the implementation of the options evaluated were not financially viable except for the establishment of Cratyla with sugarcane for dry-season feeding and Stylosanthes for pre-weaned calves. For all options to be implemented with commercial credit, a longer payback period was needed (8-10 years) and lower real interest rates (5-10%). The case of the forest margins of Pucallpa, was different, as none of the forage options evaluated, except Stylosanthes for pre-weaned calves, improved the competitiveness of farms under current management and production conditions due to low milk yields per cow and low proportion of herd in milk, which increased depreciation cost/cow to levels which were not viable. In addition, Pucallpa has an excess supply of forage biomass from a reduced herd inventory during the 80s and a limited fresh milk market which makes adoption of improved forages low attractive by farmers.

The objective was to perform an ex-ante economic evaluation of new, legume-based forage alternatives available to farmers in Latin American tropical lowlands. These alternatives included grasses of the Brachiaria genus and the legumes Stylosanthes guianensis, Cratylia argentea, and Arachis pintoi. Case studies, involving farmers participating in the CIAT-led Tropileche Consortia convened by ILRI, were conducted in the forest margins of Pucallpa (Peru) and in the hillsides of the dry tropics of Esparza (Costa Rica) and Esquipulas (Nicaragua). A linear programming farm model developed by CIAT to maximize income was used for this analysis. Animal management parameters were based on farm averages at each reference site evaluated so that they represented current management conditions. Similarly, the model incorporated the prices of inputs and products typical of each country. A constant herd size was assumed for all alternatives evaluated. Production costs per kilogram of milk were estimated as the maximum expression of competitiveness, using three cow productivity parameters: the current average production per lactation (800 kg in Peru, 1,000 kg in Nicaragua, and 1,350 kg in Costa Rica); and two postulated parameters: 1,500 kg/lactation and 2,000 kg/lactation. For all forage options, key factors analyzed were (1) milk production costs resulting from implementing each forage alternative; (2) the investment required to establish each option, assuming the same number of milking cows and herd fertility; (3) the feasibility of obtaining credit with a local bank to invest in a forage alternative; and (4) the percentage of pasture area on the farm freed for other uses as a result of establishing one of the forage alternatives. Results indicated that the forage alternatives evaluated significantly improved the competitiveness of dual purpose farms in the hillsides of Nicaragua and Costa Rica, reducing the cost of producing milk between 13% and 37% with increased stocking rates, releasing up to 36% of area allocated to pastures. However, under current commercial banking conditions (real interest rates of 13% in Costa Rica and 18% in Nicaragua with payback periods of 5 years), the implementation of the options evaluated were not financially viable except for the establishment of Cratyla with sugarcane for dry-season feeding and Stylosanthes for pre-weaned calves. For all options to be implemented with commercial credit, a longer payback period was needed (8-10 years) and lower real interest rates (5-10%). The case of the forest margins of Pucallpa, was different, as none of the forage options evaluated, except Stylosanthes for pre-weaned calves, improved the competitiveness of farms under current management and production conditions due to low milk yields per cow and low proportion of herd in milk, which increased depreciation cost/cow to levels which were not viable. In addition, Pucallpa has an excess supply of forage biomass from a reduced herd inventory during the 80s and a limited fresh milk market which makes adoption of improved forages low attractive by farmers.

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.

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.