RVO s Seminar: Fact-finding study Colombia. By Diana Alarcón & Juliana Niño

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1 RVO s Seminar: Fact-finding study Colombia By Diana Alarcón & Juliana Niño The Hague,26 March 2015

2 For Today Business Bridge Who are we? Our approach to this study Dairy Sector in Colombia Current state Value Chain & its challenges What do the challenges bring to the Dutch dairy sector? Opportunities Our Concept & Strategy proposal Areas EDI Conclusions & next steps Study conclusions Steps to implement EDI

3 Business Bridge Business Bridge Who are we? Our approach to this study Dairy Sector in Colombia Current state Value Chain Challenges What do the challenges bring to the Dutch dairy sector? Opportunities Our Concept & Strategy proposal Areas EDI Conclusions & next steps Study conclusions Steps to implement EDI

4 Business Bridge Who are we? Consortium of business consultants in The Netherlands and in Colombia. Specialized in services for bilateral commercial and cooperation projects We apply our skills and expertise across sectors. We partner up with specific experts based on the project s subjects Mirror structure in Colombia & in the Netherlands Dutch & Colombian cultural & business sensibility

5 Business Bridge Business Bridge Who are we? Our approach to this study Dairy Sector in Colombia Current state Value Chain Challenges What do the challenges bring to the Dutch dairy sector? Opportunities Our Concept & Strategy proposal Areas EDI Conclusions & next steps Study conclusions Steps to implement EDI

6 Business Bridge Our approach to this study Desk Research (quantitative information) and previous studies review Interviews (qualitative information) Sector, government & private organizations, cooperation organisms, EU representatives Situation analysis & idea-generation meetings. Discussions around sector strategies, policies, prioritization of areas that require support what the Netherlands has to offer to overcome identified challenges Dairy sector workshops With key sector stakeholders Interviews & visits to Dutch-dairy related organizations in the Netherlands To asses strengths that could potentially offer a solution to Colombian challenges

7 Business Bridge Who are we? Our approach to this study Dairy Sector in Colombia Current state Value Chain Challenges What do the challenges bring to the Dutch dairy sector? Opportunities Our Concept & Strategy proposal Areas EDI Conclusions & next steps Study conclusions Steps to implement EDI

8 Current State COLOMBIA 28 times the size of the Netherlands Eight times more milk producing than the Netherlands ( ) Yearly production of almost 6800 million liters -> half of the Dutch production (12 billion liters) Fourth largest milk producing country in Latin America after Brazil, Mexico and Argentina Colombia s dairy sector 10% agricultural GDP 24% livestock GDP 3,5% industrial GDP Share in national GDP close to 2.3% Generates around 618,000 jobs in milk production More than 15,000 in dairy processing industry

9 Current State Milk Productivity Fresh milk in Colombia is produced in 22 out of the 32 Colombian provinces Factors that determine production: altitude-adapted breeds and seasonality

10 Current State Milk Production Systems specialized & dual purpose Dual Purpose System Specialized System Livestock number (20.4 million in total) Amount of farms ( milk producing farms in total) 35% 6% Cow productivity 4+lts+per+day 15+lts+per+day million million Although+these+are+less+ More+productive+animals Production (lts per productive+animals,+they+ In+these+areas,+the+dairy+ year) produce+55%+of+the+total+ production+is+the+basis+of+the+ produced+milk+in+the+country livestock+business Solids+composition+not+as+ good+as+in+dual+purpose+ Milk quality Better+composition,+but+in+ systems,+but+hygiene+is+much+ average+hygiene+is+deficient better Average milk prices $+844 $+914+ per liter - Feb ,28 +0,31 (formal market) Usually+5%+to+10%+higher+than+ the+price+for+dual+purpose+ system Jobs created per 100 animals 5+to+6 7+to+8

11 Current State Milk Production Regions 8 producing regions prioritized by CNL - Colombian Dairy Value Chain organization

12 Current State Milk Productivity ranging from around 15 liters/day/cow to around 4 liters/day/cow

13 Current State Regions prioritized during the study: Selection based on: Production and efficiency levels Potential for increasing production Level of organization of the producers and involvement in the national dairy development initiatives

14 Business Bridge Who are we? Our approach to this study Dairy Sector in Colombia Current state Value Chain Challenges What do the challenges bring to the Dutch dairy sector? Opportunities Our Concept & Strategy proposal Areas EDI Conclusions & next steps Study conclusions Steps to implement EDI

15 Value Chain

16 Value Chain - Inputs

17 Value Chain - Inputs Inputs for milk production Milk livestock has a large dependence on concentrate feed -> largest proportion of costs Farms located in remote areas have the highest proportional concentrate feed costs Colombian concentrate feed market is stable and mature -> traditional, relatively dominant producers Pasture feed market is still quite rudimentary

18 Value Chain - Milk Production

19 Value Chain - Milk Production National milk production Steady growth in the last 3 years This growth is due to international technological developments like: Genetic improvement Livestock feeding Nutrition programs

20 Value Chain - Milk Production

21 Value Chain - Collection & Transportat

22 Value Chain - Collection & Transportat Collection Centers: Collecting, cooling, selling milk to formal processing industry: Cooperative collection centers Processing companies collection centers Collecting or picking up at farms, selling milk to informal processors (rural artisanal producers), small grocery stores and consumers in remote areas

23 Value Chain - Collection & Transportat Transportation systems: Cooled tank trucks -> large processing companies Trucks carrying milk pails -> picked up on the road Farmer s own means -> motorcycles or horses

24 Value Chain - Collection & Transportat Transportation systems: Cooled tank trucks -> large processing companies Trucks carrying milk pails -> picked up on the road Farmer s own means -> motorcycles or horses

25 Value Chain - Processing

26 Value Chain - Processing Pasteurization, pulverization and dairy production factories Based on the volume of milk they process, these companies are classified as: Familiar Companies: Regional artisanal processors (mostly cheese) in rural, low developed milk producing areas Small & Medium companies Big Industry: Most traditional and dominating the national market

27 Value Chain - Processing Processing companies segmentation

28 Value Chain - Processing Artisanal regional cheese variety

29 Value Chain - Processing SME s

30 Value Chain - Commercialization & Con

31 Value Chain - Commercialization & Consu Local consumption Colombia is the ninth milk consumer market in the world: around 140 liters per person per year Milk demand is concentrated in the upper socioeconomic levels NATIONAL AVG. LOW MEDIUM 100 HIGH 50 0

32 Value Chain - Commercialization & Consu Dairy products consumed per income level in Colombia

33 Value Chain - Commercialization & Con Foreign Trade: FOB value (million USD) 120 Exports 100 Imports

34 Value Chain - Commercialization & Con Foreign Trade Main exported products

35 Value Chain - Commercialization & Consu Foreign Trade Main export destinations:

36 Value Chain - Stakeholders

37 Business Bridge Who are we? Our approach to this study Dairy Sector in Colombia Current state Value Chain Challenges What do the challenges bring to the Dutch dairy sector? Opportunities Our Concept & Strategy proposal Areas EDI Conclusions & next steps Study conclusions Steps to implement EDI

38 Challenges in Colombia

39 Business Bridge Who are we? Our approach to this study Dairy Sector in Colombia Current state Value Chain Challenges What do the challenges bring to the Dutch dairy sector? Opportunities Our Concept & Strategy proposal Areas EDI Conclusions & next steps Study conclusions Steps to implement EDI

40 Challenges in CO and Opportunities for

41 Business Bridge Who are we? Our approach to this study Dairy Sector in Colombia Current state Value Chain Challenges What do the challenges bring to the Dutch dairy sector? Opportunities Our proposed concept Areas EDI Conclusions & next steps Study conclusions Steps to implement EDI

42 Our proposed concept - Areas All opportunities structured in an unifying concept Colombo-Dutch Ecosystem for Dairy Innovation (EDI) 1. Research & Innovation 2. Institutional Development 3. Knowledge Transfer Tecnhical Associativity & Entrepreneurship Renewable energy & water management Lead%#%1.1 New%Product%Development% Lead%#%2.1 Public%Policy%Support Lead%#%3.1 Profesioanlization%of%the% dairy%sector Lead%#%3.3% Milk%Production% Profitable%Business Lead%#%3.6% Water%Management%&% Irrigation%systems Lead%#%1.2 Reconversion% Lead%#%2.2% Training%for%trainers Lead%#%3.2 Good%Production%Practices Lead%#%3.4 Local%dairy%clusters% development Lead%#%3.7 Soil%&%Water% Preservation Lead%#%1.3 Lead%#%2.3% Lead%#%3.5 Lead%#%3.8 Inclusive%Innovations% Financial%Consultancy Dairy%Community%Centers Renewable%Energy

43 Business Bridge Who are we? Our approach to this study Dairy Sector in Colombia Current state Value Chain Challenges What do the challenges bring to the Dutch dairy sector? Opportunities Our proposed concept Areas EDI Conclusions & next steps Study conclusions Steps to implement EDI

44 Our proposed concept - EDI Ecosystem for Dairy Innovation (EDI)

45 Our proposal to approach EDI: 4 compon 1st component: A bilateral Dairy Innovation Plataform (DIP)

46 Our proposal to approach EDI: 4 compon 2nd component: A Business and Institutional Dairy Development center (BIDD)

47 Our proposal to approach EDI: 4 compon The 3rd component: Dairy Community Learning Centers (DCLC)

48 Our proposal to approach EDI: 4 compon The 4 th component: Dairy Model Farms

49 Our proposal to approach EDI: 4 compon A bilateral dairy innovation platform (DIP) Lead # 3.6 Water Management & Irrigation Systems Lead # 3.2 Soil & Water Preservation Lead # 3.2 Renewable Energy Tracking, tracing & control of collected milk Lead # 3.5 Dairy Community Cooling Chain Centers Milk Coolers Financial services Supplies for breeding and feeding Local Dairy Community & Learning Centers (DCLC).. Dairy Community CENTER Animal health control / veterinary Lead # 3.1 Profesionalization of the dairy sector Lead # 3.3 Milk Production Profitable Business Improve their farm management skills - Training with experts Learn how to improve productivity Lead # 1.1 Lead # 1.3 New Product Development Inclusive Innovations Improved Transport Lead # 3.4 Local Dairy Clusters Development Lead # 2.2 Training for trainers Training programs for trainners Coordination Develop methodologies Business & Institutional Development Center Lead # 1.1 New Product Development Lead # 3.6 Water Management & Irrigation Systems Adapt, test & evaluate research Lead # 3.2 Soil & Water Preservation Lead # 3.2 Renewable Energy Lead # 2.3 Financial Consultancy Business-center Binational Innovation Dairy Network development Advise & coaching for institutional development Dairy Model Farm Lead # 2.1 Public Policy Support A Business & Institutional dairy development center (BIDD) Lead # 1.2 Reconversion Inclusive Innovation development Lead # 1.3 Inclusive Innovations Workshops / learning by doing Demonstration of best practices: - animal health - production - income generation Lead # 3.2 Good Production Practices and Dairy Model farms

50 The whole proposed concept: EDI

51 Business Bridge Who are we? Our approach to this study Dairy Sector in Colombia Current state Value Chain Challenges What do the challenges bring to the Dutch dairy sector? Opportunities Our proposed concept Areas EDI Conclusions & next steps Study conclusions Steps to implement EDI

52 Study conclusions Conclusions Market is growing and can grow more -> potential for producing more in Colombia selling in new local, regional markets. New doors open up with FTAs -> potential for innovative products Challenges in Colombia match strengths in the Netherlands -> potential for offering knowledge transfer, expertise, consultancy on: - knowledge transfer - associativity and entrepreneurship - dairy policy development Lead potential maximized when realized in articulation and in alignment with initiatives already in place, for synergies and further momentum -> Our proposal could be the place for knowledge transfer and institutional capacity development

53 Business Bridge Who are we? Our approach to this study Dairy Sector in Colombia Current state Value Chain Challenges What do the challenges bring to the Dutch dairy sector? Opportunities Our proposed concept Areas EDI Conclusions & next steps Study conclusions Steps to implement ED

54 Steps to implement EDI What WE will do 1. Structure a basic proposal for EDI 2. Encourage bridges between possible partners 3. Define their role, possible contribution and potential gain 4. Invite required partners to participate 5. Define and sign collaboration agreements 6. Present the project to various institutions in the Netherlands (RVO) and in Colombia (Ministries and local governments) 7. Implement

55 Steps to implement EDI What YOU can do 1. Let us know if you would like to know more about participating in EDI, how you could contribute and what s in it for you 2. Participate in the coming mission to Colombia that RVO is organizing: get to know them and let them know you 3. Stay in touch with us: stay in the loop and crystalize opportunities

56 Thank you!!! Contact details Business Bridge in the Netherlands Diana Alarcón Juliana Niño Q&A session follows

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