Facing depressed prices over the last three years, the dairy farm business in Honduras finds itself imperiled.
“Unless they determine an alternative that could be profitable enough for them to remain in the dairy business, farmers may have to abandon the market in a few years,” said Carmen Algeciras (MIB ’03, BA ’01), former director, John Ogonowski Farmer-to-Farmer (FTF) program, funded by the U.S. Agency for International Development (USAID). “Cost of production is high, but not easily determined, mostly because these dairy farmers do not keep records.”
[flv:http://business.fiu.edu/newsletters/BusinessNetworks/2008/12/videos/lavin.flv 500 334]
To help reverse the threat, FTF found an ideal volunteer to evaluate current practices and devise recommendations for improved record keeping and cost analysis: David Lavin, former associate professor, School of Accounting, College of Business Administration, with practitioner accounting experience and competent Spanish.
Lavin concentrates on concentrate.
“To maximize milk production, dairy farmers feed their cows a concentrate that increases output but is the costliest part of their operation,” Lavin said. “Without detailed records, they can’t determine the point at which they can maximize production while minimizing costs, and they can’t compare their efforts to models from other countries, such as Israel,” where he once spent a day at a dairy kibbutz.
During his two-week assignment, which coincided with a diesel fuel shortage that restricted his travel, Lavin focused on farms within easy reach of his base in San Pedro Sula. Serendipitously, its Universidad Nacional Autonoma de Honduras en el Valle de Sula may play a future role, thanks to his outreach.
Identifying ways to involve local experts and universities is a trademark of the FTF program, ensuring the sustainability of the initial efforts. Lavin recommended that under a professor’s guidance, university students in various majors, including accounting and agronomy, work with some of the farmers to measure each cow’s concentrate intake and milk output.
“I arranged for the chair of the department of accounting to attend a meeting with the owners of the farms and the technicians of the Federacion Nacional de Agricultores y Ganaderas de Honduras (FENAGH),” he said, noting the challenge of delivering his talk in Spanish. “Both sides expressed keen interest in such a project.”
Among several additional ideas, he proposed establishing a fund from which farmers could borrow to improve their farms.
“The increase in production repays the fund,” he said. “Because the demand for milk currently exceeds supply, if Sula, the company that purchases the milk, adopted this program, they would also receive the increased production from the farmers, whose profits would increase—a winning situation for all.”
