This paper analyses the process of development in a wide cluster of dairy products in the Fifth Region of Nicaragua and, specifically, in the departments of Boaco and Chontales. Using the concepts of collective efficiency developed by Schmitz (1992), Nadvi (1996); Rabellotti (1997), Pietrobelli and Rabellotti (2004) et al., the authors analyze the dynamic elements of this cluster in terms of both joint actions and external economies. This work focuses also on identifying the different productive and market channels, within the "subsector analysis" approach developed by Boomgard et al. (1992), Gereffi and Korzeniewicz (1994), Knorringa (1999), Pietrobelli and Rabellotti (2004) in order to verify the channels that present higher potential for the competitive insertion in the markets of the local small and medium enterprises (SMEs). Finally, this work identifies a set of policy lessons that can be useful to promote the growth of clusters and value chains in developing countries. These contributions could be helpful for international organisations working for SME development in developing countries.