Date of this Version
Purdue University, master's thesis, 2012.
This thesis estimates the benefits and returns to consumers, processors, producers and society of the new insensitive sorghum cultivars used for the dairy production in Nicaraguan. Many dairy producers also sell their grain so sorghum production is a multi-product activity.
The breeding project of INTA developed cultivars for simultaneous use in dairy and grain production. Its first release was Pinolero-1 developed during the Nicaraguan civil war. This cultivar was rapidly adopted by farmers after the end of the war in 1990. Subsequently, five more new cultivars have been released. We consider their combined effects.
Through field surveys, we calculated the average cost reduction of milk and grain at the farm level by comparing the cost of farms with and without the new technology. To estimate the aggregate returns, we used an economic surplus model. We estimated the benefits in the dairy and grain market individually. Then we combine benefits in both markets and estimated the total rate of return. The rate of return to dairy alone was 20% and to the associated grain production 12%. We found that the social rate of return of the insensitive sorghum cultivars for combined dairy-grain production in Nicaragua is 16%. In terms of equity, we found that the main beneficiaries are consumers. Small and medium farms obtain important benefits in the grain market while benefits in the dairy market are concentrated on large farms.
Nicaragua is still in the initial stage of dairy development. The higher social returns to dairy and the recent release of a number of new cultivars indicate that there will probably be an increasing specialization in dairy. Even higher returns are expected. An increase in milk prices from expanding demand will create incentives for producers to shift to more developed dairy systems. This modernization of dairy sector will be undertaken principally by larger farmers but the principal beneficiary will be consumers. Policies, such as milk price control will slow down this modernization and are expected to reduce these potential large benefits to consumers.