Uganda risks US$77.2M annual loss as Kenya restricts milk imports

UGANDA – The Ugandan government is facing potential yearly losses of US$77.2 million due to an ongoing impasse with Kenya over milk exports, warns a top official at Brookside Dairy Limited.

Benson Mwangi, the managing director of Brookside Kampala, revealed that the company has submitted 114 export permit applications since March 2023. Kenyan authorities have either denied, suspended, or delayed these applications.

“I can’t imagine the impact on the milk and products value chain as a result of being denied permits to export,” Mwangi said. “People supplying packaging materials, our regular transporters, and even farmers are all experiencing loss if not a shortage of income because of this situation.”

In addition, he noted that the company that produces and packages powdered milk, long-life milk, cream, butter, yogurt, and ghee for a largely export market has not only been operating at below 50% production capacity but also rendered over 200 employees jobless.

Moreover, the company has been forced to focus on the domestic market in Uganda, which consumes up to 300,000 liters of milk daily.

“Our production is at a very minimal level. If this matter is not resolved, milk production could take a hit, permanently disenfranchising a fairly well-established milk value chain,” Mwangi added.

The issue was highlighted during a bilateral meeting between the presidents of Uganda and Kenya in mid-May 2024. Both leaders emphasized the need to respect and fully implement the East African Community (EAC) customs union and common market protocols.

Despite these directives, Mwangi disclosed that Brookside Dairy is still being denied product export permits.

Kenya has historically been the leading buyer of Uganda’s dairy products, but regulatory barriers have caused inconsistencies in trade relations between the two countries.

Although the EAC Common Market guarantees the free movement of goods and services, Kenya has reportedly ignored these provisions, barring Ugandan products from entering the country.

The Uganda Manufacturers Association (UMA) claims that Kenya frequently questions the origin of Ugandan products, even those with valid certificates of origin, making it difficult to access the lucrative Kenyan market.

Additionally, there are allegations that goods from Uganda are smuggled into Kenya to evade taxes.

The dairy value chain is a dynamic sector in Uganda critical to developing the rural economy and transforming households.

Samson Akankiza Mpiira, the executive director of the Dairy Development Authority (DDA), emphasized the sector’s importance and urged for a resolution to the ongoing trade barriers to safeguard the livelihoods of those dependent on the dairy industry.

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