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In Nicaragua, the production of dairy and beef is the most important source of household income for many smallholder producers. However, erratic volumes and quality of milk limit the participation of small- and mediumscale cattle farmers into higher-value dairy value chains. This research uses a system dynamics (SD) approach to analyze the Matiguás dairy value chain in Nicaragua. The paper presents the conceptual framework of the model and highlights the dynamic processes in the value chain, with a focus on improving feeding systems to achieve higher milk productivity and increased income for producers. The model was developed using a participatory group model building (GMB) technique to jointly conceptualize and validate the model with stakeholders. [ABSTRACT FROM AUTHOR]