Updated by Faith Barbara Namagembe at 2301 EAT on Friday 10th March.
Uganda’s rising trend in milk exports is likely to suffer a new dent after Kenya suspended imports of powdered milk, in what some think is a spillover of Kenya’s internal politics.
In a notice dated March 6, 2023, to all milk importers in Kenya, Kenya Dairy Board (KDB) said it was moving to protect local farmers from external products, as their output is expected to increase soon.
“In anticipation of the long rains, the government has stopped the importation of milk powders to cushion the industry from surplus production and low prices,” says a statement signed by Margaret Kibogy, KDB managing director.
She says that the board will no longer issue new import permits until further notice. Though the letter appears generalized, some businesspeople allege it was targeted at imports from Uganda, which until recently, were being blocked from the Kenyan market.
It was until the commencement of the presidency of William Ruto that there was a ray of hope when he told the Association of Kenya Manufacturers that imports from Uganda would be allowed and that the more expensive Kenyan milk be processed for the international market.
However, there have been continuous calls from both the industry and the political leaders to ban milk from Uganda because it is cheaper and outcompetes Kenyan products on the market.
Kenya is Uganda’s major milk market but the constant barriers have prompted the search for wider markets, especially in the Democratic Republic of Congo, South Sudan, Zambia, and Algeria. Other destinations for Ugandan milk products especially powdered milk include United Arab Emirates, Syria, Japan, Oman, USA, Nepal, and Bangladesh according to the Dairy Development Authority (DDA).
Processed milk accounts for more than 35 per cent of Uganda’s marketed milk according to DDA. It is not known how much of powdered milk is exported to Kenya. Recently, DDA executive director, Samson Akankiza said the Kenyan market was now fully open for Uganda’s dairy products, while talks are on with Algeria for the export of powdered milk.
The KDB notice came hardly a day after Kenya’s deputy president Rigathi Gachagua vowed that the government would ‘break the monopoly’ in the milk and gas sectors so as to bring the prices down.
Speaking at a church service in Nairobi on Sunday, Gachagua said that for a long time, the milk industry was dominated by one person [former president Uhuru Kenyatta] who has bought off all other companies and that the same went for gas.
It is said that Mt Kenya and Brookside, which control more than half the market, are majority-owned by the Kenyatta family, while political ally Raila Odinga owns East African Spectre, the main petroleum gas supplier in Kenya.
“We need to open up that sector to competition so that farmers can get a fair deal. The days of monopoly are over, and we will not let a few individuals continue to exploit Kenyans,” Gachagua said.
He insisted that this was not a political witch-hunt by a move aimed at improving the livelihood of Kenyans.
“They wanted to continue with state capture and monopoly, but that has come to an end. We are going to open up the milk and gas industry so that we can end monopoly for the benefit of Kenyans,” Gachagua asserted, adding that one person has been buying up all the companies and selling milk at inflated prices.
In 2015, Brookside acquired Sameer Agriculture and Livestock Ltd which had earlier acquired the assets of Fresh Dairy from the Dairy Corporation of Uganda. Effectively, Brookside became the leading milk buyer, processor, and exporter in Uganda.
Recently the cost of milk from Uganda in Kenya has risen to Kshs 55 (about Shs 1,600) while Brookside milk goes for Kshs 70 (about Shs 2,000) for half a litre.
Akankiza told the media that Uganda’s overall milk production increased from 2.8 billion litres in 2021 to 3.2 billion litres in 2022 and that the country remains Africa’s third largest producer after South Africa and Kenya.
According to the annual dairy performance report for the year, dairy export earnings rose to Shs 382.2 billion from Shs 344.2 billion in the previous year.