Value generation

The generation of value was analyzed considering the chain with and without milk collector, in addition to the different types of cheese factories (Table 4).

 Please insert Table 4 about here

In all the cases the highest generation of value was observed in cheese factories. Traditional cheese factories were the ones with the greatest generation of value (13.9% of the cheese value), followed by the commercial and then diversified cheese producers (13.7% and 13.1% of the cheese value respectively).

Merchants (commercialization) who were intermediaries between cheese factories and consumers had margins that represented between 9.5% and 11.5% of the cheese value. It is worth mentioning that merchants only sold cheese and benefited from the chain without investing resources; and in addition they do not generate any economic activity for the area, even though they were considered necessary since cheese factories find it difficult to commercialize their product, and if they were able to do so, it would probably increase their production costs.

The least benefited in the chain are the SDF, which absorbed the cost of milk. SDF that deliver directly to cheese factories obtained a margin between 5.76% and 6.56% of the cheese value, whereas in the chain where the milk collector is present, the margin obtained by the SDF decreases drastically between 3.38% and 3.77% of the cheese value as the milk collector obtains a benefit by decreasing the price paid to SDF.

In the chain without a milk collector, the SDF were also those with the least margins, whereas merchants obtain greater margins just from only selling the cheese. In this chain, cheese factories were the most benefited and obtain the highest margins.

In the chain with milk collector, the SDF decreased their margin and the lost proportion was taken by the collector. In the cheese factories, the generated margin was not modified in the chain without milk collector. Therefore, the presence of the milk collector only affected SDF, causing them to reduce their margin. In both chains the distribution of margins was inequitable.

DISCUSSION

Results show the presence of diverse productive actors in the area, who are linked in a value chain from the production of milk till marketing of final products (cheese) in specific markets. Giuliani et al. (2005) and Jackson et al. (2006) establish that currently the agricultural sector should not be analysed only as a simple food producing activity, but as an agri-food system that tends to form value chains from inputs, production, distribution and eventually, consumers; since this approach enables the analysis of how value is generated and how it is distributed along the chain.

The studied traditional milk – cheese generated value along its different links, noting that the industrial transformation in cheese was the link with the highest benefit. Reardon and Barrett (2000) mention that the integration of value chains in agriculture are based on agroindustry as a central element to add value to products. It also favours food security and product quality, and contributes to alleviate poverty which improves living conditions of rural people, particularly in the face of changing local and global economic conditions.

Similarly, Marsden et al. (2000) mention that effectively, food supply chains take agroindustry as a central component that concentrates in specific territories (clustering), having as main characteristic the adding of value to food production, since clustering favours input supplies, improves the productivity of firms, leads to innovations, favours the distribution of profits and stimulates the establishment of new business linked to the cluster (Porter, 1998; Humphrey and Schmitz, 2001).

In the study herein reported, the cheese manufacturing agroindustry was the link that generated the most value; and besides it was the integrating element of the chain, backwards with the SDF as input suppliers and forwards with markets. This is also reported by Hollaway et al. (2000) who state that agroindustrial transformation in small scale dairy systems enables the potential of these systems, and acts as a catalyser for access to markets. It also favours economic development in rural communities since it generates employment opportunities and incomes.

Employment in rural areas has been stated by Kostov and Lingord (2004), Lipton (2006) and Stirling et al. (2006) as the main means of generating incomes and alleviating poverty, the final goal of rural development (Ellis and Biggs, 2001).

The least beneficial finding in the traditional milk – cheese chain studied in the central highlands of Mexico was that the generated value was not distributed in an equitable form along the chain being the SDF who obtained the least of the generated value.

Reardon and Barrett (2000) mention that despite benefits obtained by agroindustrial transformation of primary agricultural production, with cluster formation and the development of value generating chains, the main drawback is that within the value chains inequity is accentuated and poverty is deepened in vulnerable groups among whom primary farmers are usually found.

Actors more strongly linked with markets were those who generated most value and obtained the most benefits in the traditional milk – cheese chain studied (the cheese makers and the cheese vendors), whilst those linked to agricultural production generated the least value and obtained the least economic benefits. Boucher and Requier-Desjardins (2005) and Salas-Casasola et al. (2006) applying the LAFS approach in their studies, also coincide in the existence of inequity within chains, being the most benefited those closer linked to markets, while farmers are the least benefited.

Bair and Dussel-Peters (2005) mention that the inequitable distribution of value within a Chain is due mainly to the fact that to linked to markets are the ones who have market information that enables them to take decisions on what and how much to produce, and therefore it allows them to establish the directions for the chain, just as was observed in the studied traditional milk – cheese chain.

CONCLUSIONS

The traditional small-scale milk-cheese chain studied is considered competitive as all of the analyzed links sold their products as intermediary goods or commercialized their products to the consumers in specific markets, distinguishing that all the produced cheese was commercialized at prices slightly above those reported by the Mexican Ministry of Agriculture (SAGARPA) for fresh cheese. However, it was competitiveness without equity where the cheese factories and merchants obtained greater economical benefit than the SDF and milk collectors.

Besides generating value, the traditional milk – cheese chain enabled actors to obtain employment and incomes, a most important factor for alleviating poverty and enabling the development of their territory, which is the final objective of the LAFS approach.