Kenya slaps new tax on Ugandan milk
Kenya has slapped a 16 per cent Value Added Tax (VAT) on Ugandan milk being exported to the country, a move that is intended to protect the country’s local milk market.
This week, Kenyan officials travelled to Uganda to verify whether the milk being taken to their country is produced in Uganda.
Trade Ministry officials in Uganda could not disclose what was decided during the meeting with their counterparts from Kenya.
But Kenya's Principal Secretary in the Department of Trade, Mr Chris Kiptoo told Kenyan media on Friday that they “deliberated on possible measures to remedy the concerns of Kenya and agreed that VAT be imposed on milk imports to Kenya.”
This week, Uganda Dairy Development Authority’s head, Dr Jolly Ziribwedda played down Kenya’s concern about Ugandan milk, saying “all was well.”
Uganda’s milk production grew to 2.6 billion litres thanks to reforms in the dairy sector.
At least 144 million litres produced in Uganda are sold in Kenya every year, according to industry estimates.
Kenyan companies like Brookside and Fresh Dairy are the big processors of milk being exported to Kenya.
But Kenya has seen its production leap to more than 5 billion litres per year.
In particular, milk production has been high from April because of favourable weather conditions, which has depressed local milk prices which scenarios has prompted the country to devise measures of protecting local dairy farmers.
The tax means Ugandan milk will be more expensive in Kenya, and this will compel consumers to go for local milk brands.
To Ugandan dairy farmers, the development implies reduced farm prices.
Dairy farmers are already depressed because they sell their farm milk at an average price of Shs400 per litre.
In October, President Museveni told dairy farmers that he had secured a market in China but nobody know how much milk is being exported to China.
Milk is one of the thorny issues East African countries are grappling with.
Many member states have violated provisions of the East African Common Market protocol to control the free flow of goods to protect their local markets.
In 2010, Kenya blocked milk imports from Uganda to protect her dairy farmers.
In 2017, Tanzania placed a $0.9 tax on every litre of milk from Kenya to protect its farmers.
