Dairy sector riding on growing market

Much as the dairy sector has not grown in leaps and bounds, a change of events in the past years seems to be driving it to the right direction. The sector is delivering according to the industry’s projections.

Last year, the sector registered impressive performance with all the different regions of Uganda having significant contribution to the total annual milk output. The total milk production by the end of 2011 stood between 1.6 billion to 1.8 billion litres, a figure which more than doubled the quantity that was produced 10 years ago. On this, the south-western region was the main producer with 38 percent while the other milk producing areas shared the remaining 62 percent.

In a telephone interview, Mr Bright Rwamirama, the state minister for Animal Industry attributed the sector’s positive returns in 2011 to the ever growing demand for raw and processed dairy products.

“In the past years, milk was used for very few things in Uganda. Most of it was always consumed unprocessed. However, this has kept changing. 2011 was the year when the use of milk for other functions such as making powdered milk, Cheese, Ghee and Ice cream surpassed the other years.”

Growing middle class doubles milk production
Mr Rwamirama said this growth trend is attributed to the steadily growing middle class and its taste for milk products, which has resulted into high demand for raw milk, a factor that is encouraging more farmers to take part in dairy farming.

“The local breed, a majority breed owned by Ugandan farmers is easily manageable for they feed on anything and are resistant to diseases which makes it cheap for a farmer. This is an advantage Uganda has over other dairy farming countries,” he explained.

Better still, there are minimum requirements for any party interested in this sector and the government has leveled the ground for whoever wants to contribute in uplifting the dairy sector. “All that is needed by any upcoming farmer is a certified operating license and minimum dairy equipment,” he says.

Dairy sector performance
According to an analysis on the Dairy Industry performance and transformation by Makerere University based Economic Policy Research Centre (EPRC), the Dairy Industry has transformed since 1990s from a net importer of processed milk products to near self-sufficiency by the end of 2009.

This rapid transformation has had fundamental positive effects on the sector’s performance and its overall economic importance in the country. For example, annual milk production has increased from 481 litres in 1990 to above 1.6 billion litres in 2011.

Secondly, the sector has an estimated $400 million market value. It currently contributes an estimated 10 percent on the annual agriculture GDP. With this, the production seems to be destined for better days, putting the country in a stronger position to benefit from the sector.

Dairy companies are testifying to this. Sameer Agriculture and Livestock Limited that deals in fresh dairy products, among others, had its sales grow by 6.5 per cent in 2010 according to a report released in July 2011. Better still, their exports increased to 31.1m litres from almost negligible amounts in 2006.

“2011 was one those splendid years that saw our sales almost double. With this growth, we are optimistic about 2012 despite the unstable economic status,” Ms Heri Nyaki the brand manager Sameer Ltd told Prosper Magazine.

This they say was driven by three factors: Development of inroads into new markets, effective innovation and transformation of relationships with consumers. Others like Jesa Farm Dairy Ltd, Maddo Dairies and Shumuk Dairy Corporation, among others have also followed suit.

Players in the dairy sector
The dairy sector is composed of different players at different levels of production. These are the dairy farmers that produce the milk, the processing/value adding firms and the exporters though some players take part in all these three fields.

At a farmer’s level, growth in the milk production levels is attributed to increase in the cattle population rather than increase in productivity per cow while at a processor’s level growth in final output is attributed to both the use of improved technology by the processing companies and the increase in the number of processing companies.