Rising milk prices blamed on low rains, consumer ignorance

Much as the number of players in the industry has increased, milk production has remained low.

Kampala

Dairy Development Authority (DDA) has attributed the recent rise in milk prices to low rains, consumer ignorance and increased demand for the commodity.

By yesterday afternoon, a litre of raw milk still sold for between Shs500 and Shs700 at farm gate price while the same amount was sold at between Shs1,200 and 1,500 by retailers. These are the same prices the product went for by the end of 2012.

These prices are high compared to 2010 when the same milk amounts went for about Shs300 and 700 for farm gate and retail, respectively.

In a telephone interview with the Daily Monitor, Mr Steven Aikiriza, the DDA’s principal quality control and monitoring officer, said that milk demand has continued to grow with consumers unconcerned about the prices as long as they can have the milk in their cups.

Consumers’ ignorance
“While this is happening, consumers remain ignorant about the market conditions. They are always willing to buy the product at any price offered by the sellers,” Mr Aikiriza said, adding: “… the seasons have been very unfriendly with very little rainfall in the past three months. We are hopeful that with the rains, the prices will go down.”

Other factors
Additionally, Mr Tress Bucyanayandi, the minister of Agriculture, told this newspaper that minus the unfavourable seasons, growing exportation of raw and processed milk was having a negative impact on the market prices. “Definitely the droughts are affecting production and prices. But there is more milk processing and exportation. All these are equally contributing to the prices,” he said, asking for more time to consult with the commissioner in charge of animals for a better picture of this situation.”

The minister’s position on the matter is equally supported by World Bank’s latest report on Uganda’s Economic Update, which listed dairy products among the country’s main exports last year. Notwithstanding, Mr Aikiriza said the current market state has nothing to do with increased exportation of milk and other dairy products, an issue he said is backed by the fact that there has never been any milk scarcity in the local market.

Relationship
He said: “There is no relationship between milk exportation and high prices. The formal sector players such as Sameer have increased their production capacity in order to meet exportation requirements. The informal players continue to produce for the small scale consumers.” Uganda’s total milk production as of 2012 stood at 1.9 billion litres, a figure that more than doubled the production 10 years ago.

nkalungi@ug.nationmedia.com