In a bid to protect processors from regional competition, the Kenya Dairy Board has ordered an indefinite suspension of milk powder importation.
“In anticipation of the long rains, the government has stopped the importation of milk powder to cushion the industry from surplus production and low producer prices,” the board’s managing director Margaret Kibogy wrote to milk powder importers in a letter dated March 6.
“Consequently, the board has temporarily suspended the issuance of these import permits until further notice.”
The regulator said it will continue to monitor the production and demand dynamics of the commodity before deciding when imports of milk powder can resume.
The move is seen as protecting processors and farmers from lower-priced milk from neighbouring Uganda.
“We will make a decision [of lifting the ban or not] after the monitoring, this is to the benefit of the farmer,” Ms Kibogy told sections of the media.
According to the Dairy Development Authority (DDA) of Uganda, milk production is estimated to have increased from 2.08 billion litres in 2015 to 2.64 billion litres in 2020. By the end of 2021 milk production was estimated to reach 2.81 billion short of the target of 3.0 billion litres.
Dairy exports in the country reached a record high of shillings 358.6 billion in the last four years and nearly doubled compared to last FY 2019/20 with dairy equipment valued at shillings 18.9 billion being imported in the country to support the growing trade.
This implies that milk production in Uganda is on the increase with massive investments by dairy producers and farmers.
DDA observes that the growth and sustainability of the dairy subsector strives to provide wealth and improved health for Uganda.
Currently, DDA reports over 880 licensed dairy businesses. Of these, some of the major producers include Pearl Dairies, Brookside Limited/ Fresh Dairy, Jesa Farm Dairy, Amos Dairies Uganda Limited, Paramount Dairies Limited, GBK Dairy Products Limited and Lakeside Dairy Limited among others.
According to the Private Sector Foundation Uganda (PSFU), it is unfortunate for the Kenyan authority to ban milk powder importation from Uganda.
PSFU is the country’s apex body for the private sector, with over 200 business associations and 2 million individual businesses.
Ms Sarah Kagingo the Vice Chairperson of PSFU said the ban by Kenya, contradicts regional trade protocols.
As per the East African Community (EAC) common market protocol, Uganda products should be permitted entry into the Kenyan market and vice versa, without any hindrance.
“Kenya’s ban on importation of our products is not new, if it’s not milk, it’s eggs or grain. The ban contradicts the EAC (East African Community) trade protocols, the Common Market Protocol on free movement of goods and services, as well as the agreement that established the African Free Continental Trade Area (AfCFTA),” said Ms Kagingo.
Asked whether PSFU would consider organising milk processors in Uganda for a protest at the Kenyan border, Ms Kagingo said their approach is engagement.
“Our approach is engagement not belligerence. Experience shows that engagement delivers,” said Kagingo.
She added,” regional trade should be the cornerstone of EAC Partner States’ policies. Our countries signed the Common Market Protocol in 2009 which came into force in July 2010. However, the practice often contradicts what was ratified, and businessmen engaged in export need handholding. We, in partnership with the Ugandan government, have held several business summits to, among others, resolve barriers to trade and travel.”
Asked what steps PSFU would take, Kagingo said Uganda’s private sector apex body will engage the Ugandan government and KEPSA.
“At a strategic level, we partner with government in pursuit of integration of markets for the benefit of the entire private sector in the region. We will table the unfortunate development to the Ugandan government to use their good offices and diplomatic mechanisms to engage the Kenyan government. We will also engage our counterparts – KEPSA,” Kagingo said.
In 2018, Ugandan milk exports totalled $131m. 74% of that ($96m) was exported to Kenya, according to data from United Nations Comtrade.
In 2019, Uganda’s exported dairy products were worth $135.9m, according to Ugandan government statistics. That figure is triple what the country earned in 2015 ($45m). Milk production also increased to 2.7 billion litres in 2019 from 2.08 billion litres in 2015.
But by 2018, Kenya began to poke holes in the cheap imports of Uganda’s milk in an effort to protect the local market. Kenya first raised its doubts on Uganda’s milk production capacity; but that was debunked through a fact-finding mission in 2019.
Technocrats then proposed a 16% levy on Ugandan milk to ensure it would be expensive in the Kenyan market but President Uhuru Kenyatta rejected the proposal. Soon after, a ban on Ugandan milk was imposed in 2020.
Since early 2021, the milk blockade has been extended to include maize imports from both Uganda and Tanzania. Nairobi said it had found these imports to contain high levels of aflatoxins that are consistently beyond safety limits.
It’s hard to measure the impact of this blockade since statistics of Uganda’s dairy exports to Kenya are not readily available. Mutahunga Emmanuel, Uganda’s commissioner for external trade, says he does not have exact figures of what volume and value of milk the country exported to Kenya in 2020.
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