Uganda dairy processors are incurring major losses due to unfair terms slapped on their products by East African Community (EAC) Member States.
With capacity to process more than 2.4m liters daily capacity, processors had to source an expanded market in Kenya, Tanzania, Rwanda and other countries since domestic demand couldn’t meet the supply.
However, the unfriendly market forces from the neighboring countries continue to sink processors into unprecedented losses after the Uganda Government failed to solve trading disputes with key EAC trading partners.
Rwanda, arguably the biggest consumer of Ugandan milk products closed the border with Uganda while Tanzania has imposed a heavy import duty, leaving milk processors and dairy farmers in heavy losses.
Kenya has also stopped milk products from Uganda.
The dairy farmers say they are set to lose approximately Shs300bn due to these unresolved disputes.
Lack of market access automatically pushes the companies to scale down operations yet continue to face huge expenditures on taxes, salaries and other fixed over heads.
Consequently, collectively dairy processors had to let go more than 2500 people during this COVID period due to lower capacity utilization driven by the ongoing Kenya blockade of Ugandan Dairy products.
East African Community Common Market Protocol is losing meaning because member countries are practicing unfair trade terms. Kenya blocking Ugandan milk by imposing volume restrictions through import permits, Rwanda closing its borders and Tanzania imposing duties on Ugandan dairy products is leading all milk processers to either substantially downsize or close.
Tanzania slapped a heavy import duty of Tshs 2,000 (Shs3,200) per litre of milk from Uganda in 2017 making business prohibitively expensive, which is against the common market framework.
This state of affairs is threatening to destroy the once blossoming dairy sector in Uganda.
Dairy processors are worried about Government of Uganda’s slow pace to engage partner states in EAC so that they open up their markets for Ugandan milk products.