Government has issued a protest note to Kenya expressing concern over the illegal seizure of Ugandan made milk and milk products under the Lato brand.
In a letter dated January 15 addressed to the Kenyan High Commission to Uganda, Ministry of Foreign Affairs, said the seizures executed on three separate occasions during this month contravene the EAC Customs Union Protocol.
The protest note, delivered by, among others, Trade Minister Amelia Kyambadde and Foreign Affairs State Minister Okello Oryem, also demanded that Kenya immediately releases the seized consignment of Lato branded milk, noting it was duly cleared by relevant agencies.
“Uganda further demands ceasing of any operation specifically targeting Ugandan made milk exports to Kenya,” the note reads in part.
The Kenya government, acting through the country’s Directorate of Criminal Investigations and Kenya Bureau Standards, seized 3,000, 25 kilogramme bags of Lato Milk, on claims that the products had been smuggled in the country without paying taxes.
However, Lato Milk protested the allegation and told Daily Monitor that they were to prove that the milk had not been smuggled.
Mr Amit Sagar, the Pearl Dairy chief executive officer, last week told Daily Monitor they had been cooperating with all government agencies to provide necessary documents to confirm the milk had been legally imported into the country.
He also protested claims that suggested that Pearl Dairy was importing milk products, which were later re-exported to Kenya in Lato branded packages.
“100 per cent of our milk is produced and processed in Uganda. We do not reconstitute any milk powder to make our UHT milk products.”
At the close of last year, a Kenyan delegation had visited Uganda to determine whether milk imports into Kenya were made here.
The move followed a surge in imported milk purportedly from Uganda amid rising complaints that the country had no capacity to export such huge quantities to Kenya.
In the protest note, government said it was surprised at the unfortunate actions of Kenyan officials, who acted on wrong information and wondered why Kenya would go ahead to impose a 16 per cent tax on Uganda’s milk products.
According to the EAC Common Market Protocol, partner states should not enact or apply administrative measures, which discriminate against the same or like products of other partner states.
Mr Steven Aikiriza, a Dairy Development expert attached to SNV, yesterday told Daily Monitor, the seizures had largely affected Pearl Dairy’s operations causing an estimated loss of more than Shs360m ($97,000).
Uganda is demanding that Kenya refrains from any actions against the country’s exports, be it milk or any other products that contravene the EAC Customs Union Protocol and Common market.
Other demands include the Kenyan government taking responsibility for any spoilage of the products that may have suffered during the illegal seizure and losses suffered in accordance with the EAC NTB elimination Act 2017.
Uganda is also seeking that any trade dispute is addressed within the existing EAC and bilateral frameworks rather than using arbitrary means that could jeopardise the otherwise blossoming trade relations between the two countries.
Kenya drops proposed tax on Uganda’s milk
Kenya has dropped a proposed 16 per cent tax on Uganda’s milk exports. Kenya’s Trade Ministry had proposed a 16 per cent levy on Uganda’s milk exports, on claims that is sought to stop dumping of cheap milk imports on its market.
On Tuesday, Kenya President Uhuru Kenyatta directed that the tax should only be levied on milk products coming in from outside the East African Community (EAC).
“To protect our milk producers from illegal imports, I have directed National Treasury to impose 16 per cent VAT on milk products that have originated from outside the EAC,” he said in an address early this week.
Yesterday private sector players applauded president Uhuru’s directive, noting it was the right thing to do to protect the East African Community protocol.
Commenting on the matter, Ms Victoria Sekitoleko, the Private Sector Foundation Uganda vice chairperson, said Kenya had seen the light in deciding to drop the tax.
“This is trade. They (Kenya) sell us Blue Band, Cereals and other products. If we start a little war over milk, it can escalate to other commodities we export to Kenya including Maize flour, beans,” she said.
Uganda early this week, warned EAC members states, saying government will reciprocate with similar measures against countries blocking Uganda’s exports.
Yesterday, Mr Dickson Kateshumbwa, the Uganda Revenue Authority commissioner customs, said the move by Kenya to drop the proposed tax was consistent with the spirit of East African Integration and the Common Market Protocol.
“I believe it promotes efforts to enhance intra-EAC trade,” he said.
However, Mr Kenyatta directed the Kenya Bureau of Standards and the Directorate of Criminal Investigations to impound any powdered milk or dairy products that do not meet Kenyan standards.
Kenya’s milk prices have fallen by 33 per cent in the last one year as processors cut the amount paid to farmers, citing a sharp increase in production.