Growing market signals good milk prospects

Uganda’s central location, potentials in the diary as well as the country’s expanding markets mainly across the region continues to present a golden opportunity for farmers in the dairy sector.

Just in the heart of East Africa, Uganda is better placed to be the main supplier of milk and its value added products such as pasteurised milk, UHT milk, yoghurt, ice cream, sour butter, sweet cream, ghee and cheese to not only the local market but the entire region and even far beyond.

The opportunities there in can well be explained by the upward trend in export revenues collected the sector since 2010. Data obtained from the Ministry of Agriculture indicates that in 2012, that earnings from the sector moved northwards rising from Shs8.8 billion in 2011 to over Shs30 billion.
In 2010, the country had earned about Shs4.7 billion from the sector.

Good comparative advantage
In an email exchange Dr Robert Wangoola Mandela, the Dairy Development Authority (DDA) development manager told Prosper that Uganda has got comparative advantage in milk production due to a number of factors including good favorable climate that allows production throughout the year.

“In term of positioning, Uganda is much closer to emerging markets such as the South Sudan, DR Congo, Rwanda and Burundi,” Dr Mandela says
“Value addition has equally improved over the last couple of years. There was only one plant in the 1990s with a processing capacity of 20,000 litres. Now there are several plants with a capacity of over 800,000 litres per day,” he adds.

However, unless more emphasis is put on processing and value addition, it may not be so long before these opportunities are seized by other countries.
This is so because much of the milk produced locally is consumed in its raw form with no added value.

Since 1990, there has been high growth in local milk production marking off the growth with an estimated 460 million litres. Since then, Uganda’s annual milk production has continued to grow at a rate of about 9 per cent annually which currently stands at 1.9 billion litres annually.

Out of the 1.9 billion, 70 per cent is put on the market for commercial consumption with the 30 consumed by households. However, it is important to note that by mid last year, only about 30 per cent of the total milk produced locally was processed while the rest was consumed in a raw form.

Recently, Mr Stephen Paul Gitta, a director at Uganda Exports Promotions Board (UEPB) noted that the country must invest more in value addition for all its exports mainly those from the agriculture sector or risk losing its regional market.

“We have been supplying South Sudan and East Congo by chance. The political situation made them unable to produce and thus demanded for imports. Now that South Sudan has stabilised, they will start manufacturing and processing their own milk,” he says.

Some of the main challenges to the dairy sector include low farm-gate prices that discourage farmers, poor milk collection methods and inadequate collection facilities mainly in rural areas, prolonged dry season and continued dependency on labour intensive techniques of production.

As of this month, average farm-gate price per litre of milk stood at about Shs650. However, the same amount of raw milk is sold at an average of Shs1,050. Far still, a litre of pasteurized (whole milk) is currently going for an average price of Shs2,000.

“The government needs to regulate the prices of milk. As farmers continue to get raw deals yet the resellers earn big. This discourages us,” Mr Ronald Tumusime, a cattle farmer notes.

However, resellers and processors attribute the difference in farm-gate prices and resale prices to the high costs of collecting, processing and storing milk before it is put on the market.

“It all goes back to the value addition chain. Keeping milk safe and good for consumption after collecting it from the farmers is very expensive. The freezers, coolers all require 24 hour electricity among others. This is what explains our resale prices. It is not fair to only look at the resale price and make conclusions,” Mr Henry Katto, a milk distributor in Bweyogere said.

Additionally, Ms Justine Nalubanga, the executive director of Mama Fresh Dairy recently told this newspaper that the high price is a result of the high costs incurred as milk is a delicate and perishable product that needs high quality tools to ensure it stays good.

Nonetheless, Dr Mandela, believes that many of these obstacles particularly the low farm gate prices will with no time be no more as the market continues to open up for competition.

“Farm - gate prices are still low. But, the processing capacity is projected to double in the next five years; therefore prices given to farmers will improve with increased competition.”

He adds: “Emphasis should now be on commercial dairy farming, raising breeding stock, commercial animal feed production, dairy equipment and inputs supply shops, milk transportation, processing and value addition and agricultural finance.”

Government injections
Far still, Mr Tress Buchanayandi, the minister for Agriculture says the government is channeling more resources in the sector to ensure more milk production across the country.

“As government, we committed to boosting milk production to as high as 200 million litres per day by 2014. We are establishing valley dams and tanks in production areas to help during dry seasons, and also support dairy cooperatives with milk chilling facilities.”

Uganda has over 30 registered companies that add value to raw milk. The main players being Jesa, Sameer, JBK, Hillside, Tip-Top, Dilunga, Mama, Pearl, UCCU, and Maddo Dairy among others.

According to DDA, Uganda is divided into six milk sheds. These are based on the differences in geographical agro ecological characteristics, market dynamics and cattle population.

As of 2011, their contribution stood as follows with South-western contributing 25 per cent, mid-western 12 per cent, central 24 per cent, eastern 21 per cent, northern 11 per cent and Karamoja 7 per cent.

The sector was by the end of 2011 estimated to have a market value of about $400 million. It currently contributes an estimated 20 percent to Uganda’s annual agriculture gross domestic product.

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