Abstract for: Creating Win-Win Situations by Intervening on Leverage Points: The Case of a Dairy Production Value Chain

We employ system dynamics to intricately model the dairy production value chain in Brazil. Our objective is to evaluate policy alternatives aimed at enhancing the resilience of small and medium-sized farmers amidst economic and institutional volatility. Brazil, being one of the world's largest milk producers has seen a reduction of around 32% in the number of small and medium dairy farms during the past years. With Brazil’s lessening support for small agricultural producers, small and medium farmers are having their operational viability violated by market and institutional volatility. This is problematic for the Brazilian economy due to the socio-economic role of small farming and its importance to national food security as well as foreseen external system shocks due to climate change. In face of this problem, we depart from a pre-existing model and propose interventions based on key leverage points: (1) government subsidy to improve pasture productivity and (2) educational programs. We found that combining both interventions may lead to net-positive investments, benefiting both the government and farmers.