Dairy Sector Cannot Depend on External Market - DDA

The Dairy Development Authority (DDA) Executive Director Dr Mike Kansiime says they learnt that the sector can no longer rely on the export market. And consequently, he says the government is deliberately working to promote the internal market.  

According to Dr Kansiime most of Uganda's milk was exported, and 80 per cent of it to East African Countries. The Food and Agriculture Organization report in 2015 said more than 50 per cent of Uganda’s milk export was going to Kenya.

But Kenya which was the biggest market for Uganda dairy products locked their market in January 2020, with a ban on products from pearl diaries. Earlier, Rwanda had closed its border, yet Tanzania slapped a 200 Tanzania Shillings tax on every litre of milk that entered its market from Uganda.

There is no recent data on dairy exports. But in 2017 dairy exports amounted to approximately 300 million litres, which was more than 10 per cent of  the 2.5 billion litres of milk produced in Uganda in the same year, according to SNV, a not-for-profit international development organization with offices in Uganda. Dairy Development Authority statistics show milk production has gone up to 2.5 billion litres as of 2020.  

The government is now working to expand the local market to bridge the gap that was created by the  East Africa Community market loss. On March 14, 2021, President Yoweri Museveni said that the government is looking at the possibility of giving school children porridge and milk to grow the internal market for maize and milk in the next financial year. Dr Kansiime says Dairy Development Authority is the chair of this initiative.  

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Dr Kansiime says the initiative of giving school kids milk has been piloted in some western Uganda districts. This initiative, he says will require the efforts of parents. Instead of buying juice for kids at school, he says, they should buy them milk.  

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Some of the leading processors are already feeling the pinch. Pearl Dairies Limited, the processors of Lato Milk last week said it has laid off over 1,500 employees and is operating at less than 30 per cent of its capacity.

The company used to sell most of its milk to Kenya.  Pearl Dairies Limited has also started advising western Uganda farmers affected by low milk uptake to invest in bee farming as an alternative source of income. Michael Van den Berg, the head of Dairy and Apiculture development at Pearl Dairies said last week.  

Although Kansiime admits that the pandemic has caused a market loss, he argues that it has not led to a price decline because many of the processors have been processing liquid milk into powder. A kilogram of powdered milk takes up to 10 litres of liquid milk, but while this has been done, the processors are still struggling to find a market.

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A litre of milk currently goes for 1,100 Shilling as farmgate price in South Western Uganda and 1,700 Shillings as retail price, according to the March data of Dairy Development Authority.  Its 850 Shillings at the farmgate price in Central Uganda and 1,800 at the retail price. The farmgate price is 950 Shillings in Eastern Uganda and 2,000 Shillings at the retail price. In northern Uganda, the farmgate price is 1,100 Uganda shilling and 1,700 for the retail price.

The Authority does not publish data for previous months that can be based on to calculate price changes.