Taxes in milk sector must apply to all, says player

You took over Fresh Dairy in 2015, how has the journey been since?
We have taken our time to learn and in the process have come across some challenges, especially with the history of the brand.
We were taken aback by consumer complaints and we have successfully handled a number of these complaints.

What were some of the complaints?
Many were about quality of some products. However, we have made extreme transformations. We have invested more than $13m (Shs48.5) in equipment to process milk training farmers on the importance of quality.
Milk from farms in terms of volumes and quality has improved, partly because of the rains, and that is something we want to encourage farmers to maintain.

Speaking of farmers, how many do you employ on your value chain?
We currently work with more than 80 groups representing about 50,000 farmers in the southwest and central regions.
These people depend on us to improve their households. Therefore, we endeavour to move them away from subsistence to commercial farming.

Discussions about processors increasing farm gate price was a heated topic last year. How far have you gone with this?
Currently, we pay farmers Shs1,300 for a litre up from Shs700 when. It is a company strategy to increase prices.
We have also increased the milk we buy from 70,000 to 300,000 litres a day, which has helped farmers to substantially improve their incomes.

Have you put measures to maintain quality throughout the value chain?
We collect milk directly from farmers. Have we have collected the milk we subject it to more than 30 tests to ensure that it meets required quality.
From the village, to the milk collection centre and bulk collection centre to the factory, there are multitudes of tests that make quality a priority.

How do you handle changes in weather partners?
Weather is a big part of milk production. We continuously train and encourage farmers to invest in their farms by upgrading their livestock, planting foliage and making sure animals have enough to feed albeit the weather changes.

As a major market player, how would you asses the sector?
The sector is doing well at the moment and there are better prospects because there is a lot of unexploited potential.

People think milk prices are high, is there any chance of price coming down?
Taxes feed into milk prices. However, beyond this is the problem of loose milk.
If there was a way all milk would be going to factory it would have serious impact on prices. Loose milk, which is unprocessed, cuts on the amount that ends in factories, which effectively reduces their capacity to satisfy the market demands.

What are some of the challenges you experience?
There has been an improvement in the roads sector, which has improved our movement as we source the milk. However, a lot needs to be done in villages because when it rains, the roads are impassable, limiting access.
In addition to this, much as we are subjected to stringent quality control measures, loose milk is exonerated yet we are all looking the same consumers.
The ground should be levelled as an industry standard. Equally animal diseases affect us. We must ensure that vaccination is made mandatory to mitigate challenges.

Haven’t taxes affected you given that every other sector is crying over the same?
We have a duty to pay taxes. Last year alone, we paid in the excess of Shs4b.
However, levying VAT on processed milk makes it expensive thus consumers opt for the loose milk that is cheap because it is not taxed.
How are you performing in the export market?
We exploit the East African market, mainly in countries that have deficits. We currently export to Kenya, Tanzania and South Sudan as well as some parts of Southern Africa and the Middle East where processed ghee is popular.
In the last two years we have exported products worth $44m because we understand that that we have to exploit opportunities whenever they are.

How comes you have not penetrated Rwanda?
Rwanda is generally producing more than they can consume so for us to export would call for specialised products.

There are reports about difficulty to enter Tanzania. Is this true?
Yes, we have been encountering non-trade barriers which limit our reach. Tanzania is a milk deficit country. We keep looking for ways to export products to them in vain. For instance, it is much easier for them to import from the Middle East than from Uganda.
However, there is been some dialogue by the East African Council to persuade Tanzania to remove these obstacles which not only affect Uganda but Kenya.