A.  Development Potentials and Opportunities

 1.     The presence of  Dairy Zones


At present, there are four (4) existing Dairy Industry Zones in the region.These Dairy Zones were identified based on the following criteria:

a. The zone is composed of contiguous municipalities with dairy animal population of not less than 300 heads;

b. There are existing dairy cooperatives or livestock associations that are engaged in milk production, collection and processing;

c. There are government agencies providing technical assistance in the development of the Dairy Development Program of the dairy cooperatives or livestock associations; and

d.  The LGUs of the identified municipalities have integrated Dairy Enterprise Development in their respective Comprehensive Local Development Plan.   


On the basis of the above stated criteria, the Dairy Industry Zones with the component municipalities are as  follows:




1.  Cagayan Dairy Zone

Tuguegarao City, Amulung, Alcala, Solana, Enrile, Peňablanca

2.  Isabela North

San Pablo, Cabagan, Tumauini, Ilagan, Gamu, Sta. Maria, Mallig, Roxas

3.  Isabela South

Jones, Echague, San Agustin, Cauayan City, Santiago, Cordon

4.  Batanes



Within the dairy zones are Dairy Cooperatives that are being assisted by the Department of Agriculture through the Philippine Carabao Center.   The Cagayan Dairy Zone has the most number of Dairy Cooperatives with 5, Batanes and Isabela North have one each while Isabela South has two dairy cooperatives.

There is also an existing dairy cooperative called Sta Cruz MPC at Pamplona, Cagayan which is located outside of the identified dairy zone in Cagayan.

2.     Presence of Government Dairy Institutional Farms 

There are five government institutional dairy farms (Figure 1) which are established in the State Colleges and Universities operating in the region namely: Cagayan State University at Piat, Cagayan campus; Cagayan Valley Agriculture and Natural Resources Research and Development (CVARRD) based at Isabela State University at Echague, Isabela campus;  Quirino State College (QSC) at Diffun;  Maddela Institute of Technology (MIT) in Maddela, Quirino;  Nueva Vizcaya State University (NVSU) in Bayombong, Nueva Vizcaya.


These institutions serve as dairy incubators and provide extension services to improve the skills,  technologies as well as management capabilities of dairy cooperatives and entrepreneurs in dairy production, processing and marketing. Table 1 presents the different institutions and the corresponding production and support services they provide. The Philippine Carabao Center based at the Cagayan State University-Piat Campus and the Cagayan Valley Agriculture and Resources Research and Development based at the Isabela State University have a more comprehensive package of services extended as compared to the other institutions whose services are still limited to improvement of technology for dairy stock production.


Production and Dairy Support Services 

3.     Availability of Technologies for Dairy Animal Production

The Unified Artificial Insemination Program was implemented to consolidate the output for both carabao and cattle through a professionalized delivery of services by trained Artificial Insemination (A.I.) technicians for crossbred animals within the period of 20 years.  Under this program, murrah buffalo crossbreeding program in Region 02 is an organized effort to increase the genetic potential of native carabao not only for milk production but for meat production as well. From the reports of the Philippine Carabao Center, a total of 448 animals  were subjected to artificial insemination from 1986 to 1990 and increased by an average of 20% from 1991to 1995. With the intensified program the number peaked to 12,702 growing by an average of 60%, but declined by 11% from 2001-2005. For 20 years, a total of 21,987 animals were covered by artificial insemination covering  13.8% of the total female buffalo population in the region. 

From an initial of number of 69 animals crossbred in 1986, its number grew by an average of 47.5% from 1991 to 1995 but declined from 1996-2000 accounting for only 11.5%. From 2001-2005, a total of 835 animals were covered by A.I. bringing a total of 2,314 or 47.5% from 1991 to 1995 but slowed down from 1996-2000 by 11.5%. From 2001-2005, a total of 835 animals were covered bringing a total of 2,314 also for improved meat production.


The Carabao Upgrading Program was started in 1986 by strengthening the Philippine Carabao Research and Development Center (PCRDC) in partnership with the Department of Agriculture and the Provincial Veterinary Offices and selected municipalities with funding assistance from the United Nations Food and Agriculture Organization (FAO) and the United Nations Development Program (UNDP).  It should be noted however, that its low performance is still low due to the reduction in national subsidy for the program for which the Local Government Units are supposed to absorb the funding requirements as a result of the devolution. Moreover, the program is not yet fully accepted by the farmers as they still prefer the natural breeding technology.

4.   Availability of Government Support Programs

      4.1  Loan Assistance Program

The DA-PCC extends assistance programs to dairy producers through the Bull Loan Program using the “25 Dairy Buffalo Module Scheme” and the “PAIWI Loan Scheme”.


Through the “25 Dairy Buffalo Module Program” the buffalos are extended directly to NGOs/cooperatives, and government dairy farms, or indirectly to NGOs through Local Government Units (LGUs).  For an NGO to qualify, it must be duly registered with appropriate government agency, which registers organizations or associations for purposes of giving legal personality. The NGO should meet the requirements such as a) well-defined organizational structure; b) with at least a 500 square meters animal shade; c) able to pay the P10,000.00 guarantee fund; and d) attendance to all trainings, seminars, and meetings called for related to the program.  So far, the PCC has extended the program to 8 dairy cooperatives and associations with a total of 234 dairy buffalos. Average repayment is recorded at 62%.

This type of loan being extended by the PCC is almost similar with its Dairy Buffalo Module Scheme.  They differ somehow in the repayment scheme where the recipients are going to pay the PCC one female calf (18 months old) out of three consecutive calving.  On the succeeding calving, the 50-50 sharing scheme is observed.  When the breeding capability of the animal is diminished, the recipient shall return the animal to the PCC.


Under the PAIWI Loan Scheme is also the bull loan scheme.  This scheme has the same client eligibility requirements as the Dairy Buffalo Module Scheme, plus the insurance of the bull.  The ownership of the bull under this scheme is only transferred to the client once it has sired 50 calves within a certain period of time.  The sired calves and their offspring must be properly evaluated and passed the PCC standards. For clients of yearling bulls, at least 25 offspring must be properly evaluated by the PCC before ownership is transferred.


      4.2 Support Facilities

For 2006, the national government provided region 02 a Mobile Liquid Nitrogen Tank worth P5M. which is intended for the preservation of semen, vaccine and blood samples. National funds were also allotted for massive training of village based Artificial Insemination Technicians.


5.     Willingness of Local Government Units to Partner with DA-PCC for the Dairy Program


At present, a total of 142 bulls are distributed in   several municipalities namely:

a) Isabela, 58 heads were distributed in Naguilian-32; Ilagan-11; San Mateo 10 & Sta Maria 5.

b) Cagayan Province, 42 heads distributed in Tuguegarao-12; Aparri-2; Solana-5; Penablanca-5; Amulung-8; Rizal-5; and Pamplona 5.

c) Quirino Province, 21 bulls were distributed in Cabarroguis.

d) Nueva Viscaya Province, there are 25 bulls distributed, 20 of which are in Bagabag while 5 bulls were given to Aritao.


These animals are used as breeding bulls to serve the hundreds of native carabaos in the villages for the crossbreeding technology. The resulting progenies which have 50% blood line of the native and imported buffaloes are ideal animals for milk production. To date, close to 2,000 crossbred buffaloes are scattered throughout Region 02 and these are concentrated in San Agustin; Isabela with 600 crossbreds; Solana, Cagayan with 200 crossbreds; Piat, Cagayan with 100; Amulung with 200; and Penablanca with 50.


6.  Corn Industry as a Forward Linkage to Dairy Industry


As of 2004, a total of 316,411 hectares is planted with corn with a total production of about 1,198,349 metric tons in the region. If a portion of this area will be used for corn forage/silage production, it can provide better nutrients for dairy animals.  Corn forage is high in digestible nutrients compared to other grasses. Although it has a very low dry matter content which is only 30%, it blends very well with legumes and concentrates to improve the dry matter content of the ration.


Based on DA-RFU2 comparative cost and return analysis for corn production, it shows that if a hectare of land is utilized for the production of corn silage, it can yield an average annual income of P73,260.00. In contrast, the average annual income derived from corn grain production is estimated at P44,010.00, or a difference of P29,250.00 as shown in the table below.


Comparative Cost and Return Analysis for Corn Production in a Hectare Land



7.   Available Pasture Leases


In the identified dairy zones a total of 12,033 hectares could be tapped as forage production areas for the 1,957 heads of potential dairy animals.  A total of 30 pasture lessees were identified in the Cagayan Dairy Zone covering 7,153 hectares with a total of 1630 dairy animals which are potential for crossbreed production. For Southern Isabela Dairy Zone, there are 7 pasture lease holders that manage 940 hectares of grassland with 327 dairy animals. In North Isabela Dairy Zone, there are 13 pasture lessees that manage 3,940 hectares. 


8.  High Demand for Milk and Milk Products


Considering the present and projected population of Region 02, and the supply of milk from pure and crossbred buffalos, the sufficiency level accounts for only .04%.  However, with the expected development of the dairy industry in the region, the sufficiency level is expected to increase to .27% by 2015.


Pasteurized milk is the easiest to prepare and the most in demand among the by-products of milk.  It was estimated that of the 16 kilogram annual per capita consumption, about 20.8 liters are in the form of pasteurized milk.


The three institutional dairy farms located in Cagayan, Isabela, and Quirino and the Integrated Farmers Cooperative in Cagayan are producing reconstituted pasteurized milk.  About 125,500 packs of reconstituted pasteurized milk at 200 ml /pack can be produced.

At present, commercial ready to drink (RTD) milk is sold at P14.00 per 200 ml pack while the locally produced reconstituted pasteurized milk is sold at P9.00 per 200 ml. If promotion and advocacy on the consumption of locally produced pasteurized milk is intensified, it will be a boost to the dairy processors in the region.


Although there are no available records on the volume of the region’s milk candy and other milk products sold, these are readily bought by local and foreign tourists for “pasalubong”. 


9.    Presence of Some Successful Dairy Farmers in the Dairy Zone


As published by Dr. Sosimo Ma. Pablico in his book “Changing Lives” (2006), a compilation of success stories, four dairy farmers from the Dairy Multi-Purpose Cooperative in Cagayan were included. These successful farmers are headed by their manager Ricardo Pamittan.  The cooperative was organized and registered in 1994 and in 1998, the 25-Dairy Murrah Buffalo Module was extended by the Philippine Carabao Center.  A year after the assistance, a couple recipients who are both graduates of Bachelor of Science in Education, opted to raise carabao rather than practicing their profession. They started earning an income of P9,090 in 1999  and in 2004, they already  earned P104,000-P108,000 from this livelihood activity.  There are also other successful dairy producers from the different cooperatives included in the said book whose success stories can be disseminated to serve as models for other dairy farmers. 


 10. Presence of Dairy Processors in the Dairy Zones


Of the four existing Dairy Zones in the region, the Cagayan Dairy Zone has two Dairy Processing Centers. The Integrated Farmers Cooperative operates a Level 1 or kitchen type processing. A private entrepreneur in Alcala Cagayan operates a Level 2 processing center and is the major producer of milk candies.  . These are engaged in the processing of milk candies and pastilles.   There are also entrepreneurs in this zone engaged in the manufacture of ice cream but they utilize skimmed milk as one of their raw materials.  

On the other hand, the Isabela North Dairy Zone has one existing Level 1 dairy processing.  The products processed are pastilles and pasteurized milk.


Two milk processing centers are established in Isabela, one in San Pablo and another in san Agustin. These projects are being funded by DOLE, Provincial Government of Isabela, the Congressman in the identified districts and the Philippine Carabao center.