Project Location   |   Project History   |   Current Program   |   Results

Dairy ProgramDairy

The farmers in the Eastern portion of the Southern Sierra, near Lake Titicaca, raise cattle for milk and beef. Cattle need more water than alpaca, and the area near the Lake hasbetter pastures, water, and rainfall. The soil has higher moisture content and the water table is closer to the surface. When the rains are heavy, the Lake rises and floods the surrounding area, and evaporation from the Lake causes more rainfall.

There is a strong demand for milk, cheese, yogurt, and beef in the cities near Lake Titicaca (Cuzco, Juliaca, and Puno), both from residents and the hundreds of thousands of tourists that visit Macchu Picchu and Lake Titicaca each year. Also, Grupo Gloria, Perú's major milk processor, is building a milk processing plant in the area, where they will condense milk for sale throughout the country.

SID is helping 365 members of 12 dairy producers’ associations in the municipalities of Atuncolla, Caracoto, Huata, and Capachica to meet and negotiate with milk processors, analyze alternatives, and make business plans.  We also help them increase their productivity by improving the health, watering, and feeding of their cows.  They select their cows more carefully, give them vitamins and minerals, dose them against parasites, construct cowsheds, and shelter their cows during the cold Southern Sierra nights.  They are also digging farm-ponds for better watering throughout the dry season, growing fodder oats and alfalfa for better feeding during the dry season.  Additionally, they are reclaiming soils and pastures by putting eroded pastures into reserves, reseeding pastures, improving delineation of pastures, and establishing stricter rotation for grazing.

The farmers increased their productivity from 4.7 to 7 liters of milk per cow per day, and their average income from $425 to $656 in the first year of the project.

AlpacaCredit Program

SID provides small loans to dairy farmers and cattle fatteners. We currently make loans to approximately 100 borrowers, the loans range from $500 to $700. The interest rate is 3.0% per month. We make the loans to solidarity groups of three to five borrowers in order to reduce administrative costs and risk. The loan cycle is five to six months, with a single repayment of principal and interest at the end of the cycle.

SID is the only micro-lender located in the four municipalities, and our loan program is designed to serve the unique needs of the dairy farmers and cattle fatteners.  Micro-lenders in the city of Puno often use a shorter loan cycle with periodic repayments that does not respond to the needs of the farmers. Cattle fatteners sell their cows and buy new ones twice a year.  Also, dairy farmers make their investments at the start of each rainy or dry season, and each season lasts five to six months. The micro-lenders in Puno often prefer to organize borrowing groups in communal banks of 30 to 35 members to further reduce administrative costs, but dairy farmers and cattle fatteners are dispersed throughout the area, making it difficult to organize five to seven borrowing groups into a communal bank.

The current default rate is below 1%, and SID has established a loan-loss reserve of 2% of the portfolio. The six-month loan cycle and evaluation of results help us monitor conditions in the dairy and beef industries, as well as the business activities of the borrowers. The cycle and evaluation also help us take action, as necessary, to reduce risk and protect the portfolio.