The main objective of the project was to increase the number, productivity and quality of cattle, caraboa (water buffalo) and goats in The Philippines, thereby augmenting the participation of smallholders in livestock production as a means of improving their income and diversifying on-farm employment opportunities.


    Farmer transporting rice thresher in Mantapi, on Negros Island. The project enables 116 farmers participating in the Mantapi Communal rrigation System to irrigate rice crops with water from the Bacu River.The aim of the project is to increase rice production to a level of total 
self-sufficiency. (The island now requires 20% of rice from outside sources.)
  • Establishment of a pilot scheme for milk production, collection, processing and marketing within the smallholder sector.
  • Livestock improvement through the provision of improved beef and dairy cattle and encouragement for goat production.
  • Establishment of backyard fattening and marketing facilities.
  • Provision of cattle on credit to backyard milk producers and cattle fatteners.
  • Provision of equipment, transport and training facilities to strengthen the organizational and institutional capacity of the state livestock services.


The project led to an increase in the demand for and consumption of ultra high treatment (UHT) processed fresh milk and fresh pasteurized milk. By the end of the project, the consumption of UHT fresh milk was said to have doubled to about 10 million litres a year. The demand for and the prices of milk products also increased. Project activities encouraged three major producers to invest in dairy production and processing. The project motivated the formation of farmer cooperative groups, and a number of smallholder farmers joined larger medium-scale producers with the capacity to provide management, operating capital and marketing support to form small commercial operations. In addition, the training of project staff proved productive and was a major factor contributing to project success.

However, changes in government policy and unfavourable loan terms meant that the proposed credit scheme for backyard milk producers and cattle fatteners was never initiated. Moreover, the achievements under the livestock improvement component were limited due to policy changes, budgetary constraints and problems with inter-institutional cooperation, substantially reducing project benefits and dairy industry development. The failure to implement the livestock improvement and cattle fattening components contributed to a shortage of meat and animals for fattening. It is estimated that by 1988 there were only 120 000 head of cattle in the country, as opposed to 180 000 head in 1980 at the time of project formulation.

Organizations and people



To strengthen public-sector organizational and institutional capacity by establishing offices and providing equipment, transport and training facilities.

To upgrade existing training facilities at the Dairy Training and Research Institute (DTRI) and Central Mindanao University (CMU) and establish programmes for training smallholders in dairy management, pasture development, milk collection and milk processing. New milk products and extension techniques were also to be developed.

To organize farmers into barangay (village) milk associations.


Two milk zone offices were established and equipped in Luzon and Mindanao, although only limited numbers of vehicles were procured. A total of 54 man-months of overseas training in dairy husbandry, dairy technology and dairy industry planning were provided in Queensland, Australia. Consultants in dairy technology, dairy production, animal health, economics, breeding and computer services were recruited locally.

Training facilities at the DTRI and CMU were not upgraded due to an administrative misunderstanding. The DTRI supported the project by providing technical services, assisting in the organization of a milk marketing cooperative and processing milk from the project in its existing facility.

Farmers were successfully motivated to form cooperative groups.

Access to inputs and infrastructure



To provide funds for the procurement of 6 200 cross-bred dairy cattle (of which 3 700 were to be imported and 2 500 purchased from local sources).
To provide credit for the establishment of 40 backyard production units, each consisting of two-three cross-bred milking cows.

To establish 3 500 backyard cattle-fattening units, each unit fattening two male stock at any one time, and to procure 7 000 male cattle to supply to them. The project was to support the provision of credit facilities by the Philippine National Bank to enable beneficiaries to purchase the cattle.


A total of 2 400 dairy cattle were imported, and a farm management advisor was recruited in May 1984 for five weeks to assist in handling the first shipment of heifers. However, only 328 cattle were procured locally. The local dairy animals were distributed to demonstration units set up specifically to show future smallholder dairy-farmers how to handle the new enterprise.

Changes in government policy and unfavourable loan terms meant that the proposed credit scheme for backyard milk producers was never initiated.

The project procured 283 stock for the cattle-fattening units. Due to financial problems, only 261 male calves born of project cows were fattened by farmer cooperatives.

Risk management

At project appraisal, The Philippines imported 99% of its total consumption of dairy products and 39% of its total consumption of meat products, and the existing dairy processing industry was based on the processing and repackaging of imports. Government efforts to promote and increase smallholder milk-production were very unsuccessful due to the absence of a traditional milk producing culture. Low production levels rendered milk marketing facilities economically unviable. The major constraint on the development of a viable smallholder dairy industry was the existence of cheap milk imports.



To establish 85 village-based milk collection stations.

To establish two milk chilling centres in Luzon.

To establish three milk processing plants at the DTRI in Luzon, at CMU and at Cagayan de Oro, in Mindanao. These facilities were to be used for the chilling and testing of milk and milk pasteurization and processing into cheese curd and butter.

To procure UHT milk processing equipment.


Only 42 milk collection stations were established, collecting milk from 143 of the 155 villages. The dispersal of cattle in 155 villages as opposed to 85 led to problems with milk quality, increasing the costs of collection for processors and decreasing farm incomes.

Milk chilling centres were established at Trece Martires City, Cavite City, Lipa City and Maraouy, but shut down in April 1986.

The milk processing plants at the DTRI and CMU were never established. A plant was established at Alabang Stock Farm, instead of at Cagayan de Oro. However, it ceased operations in April 1986 and is now idle.

No information is currently available on the procurement of UHT processing equipment.

Herd improvement

Despite the favourable climatic and physical conditions and the abundant forage resources, the potential of dairy and livestock enterprises had not been fully utilized. It was established at appraisal that the lack of suitable dairy animals and the high cost of importing improved breeds were key factors hindering the development of a milk production industry.



To support the upgrading of facilities at the National Artificial Breeding Centre at Alabang, including the provision of accommodation for trainees, training equipment, laboratory equipment and transportation. The project also intended to procure and install liquid nitrogen plants with the associated storage equipment at five centres.

To establish 135 artificial insemination field units, the purpose of which would be to conduct artificial insemination breeding programmes in about 20 selected villages and to supply the programmes with transport and the necessary equipment.

To establish a pure-bred Brahman herd of 50 cows at the Bureau of Animal Husbandry Livestock Farm in Masbate, with improved pasture, farm equipment and additional fencing. The herd would produce improved bulls for dispersal.

To purchase 200 local and 300 imported bulls in order to facilitate the annual production and distribution of 100 improved breeding bulls. Bulls were to be allocated free of charge to selected farmers and would become theirs after three to four years if satisfactory services had been made available to other villagers.

To establish facilities for the production-testing of about 200-400 dairy cattle.
To encourage goat production and the consumption of goat products and to strengthen extension programmes.

To establish a facility to investigate embryo-transplantation techniques for possible use in future breeding programmes.


The National Artificial Breeding Centre received 152 semen storage containers, two motorcycles and other materials and equipment. It was also the only centre to receive a liquid nitrogen plant.

Artificial insemination technicians were assigned to 19 provinces, and 27 237 cows were inseminated - an 11% increase in conception rates relative to 1986. The field units were provided with eight motorcycles.

The proposed breeding herd of 50 cows in Masbate was not established.
Under the bull dispersal programme, only 15 local breeding bulls were purchased for distribution.

Facilities for the production testing of the planned 200-400 dairy cross-animals were established. The project provided 184 hectares of improved pasture, nine cattle sheds, one milk shed, milking equipment, farm machinery and a motorcycle. A total of 200 pure-bred cattle were imported to start up the production testing programme. However, due to heavy losses among the pure-bred animals, it was decided to cancel the programme in 1986, and the animals were distributed to farmers and institutions.

A total of 200 imported Anglo-Nubian goats (160 does and 40 bucks) were purchased.
No information is available on the research into embryo-transplantation techniques.

Lessons learned

  • Donors and co-donors should ensure that changes in governments or in government polices do not adversely influence project implementation. This can be accomplished by placing more emphasis on the development of private-sector institutions capable of handling the implementation process.
  • Smallholder farmers may increase and diversify their incomes by including milk production in their farming systems.
  • The association of small commercial farmers with smallholders is an effective means of involving the private sector in smallholder development and allows smallholders to learn from commercial farmers.
  • Assured credit and marketing arrangements are critical to the successful establishment of small-scale producers.
  • It is necessary to consider the issue of animal health when designing livestock projects. Failure to ensure that imported animals had been vaccinated resulted in losses.

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