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Dairy sector grows but serious challenges remain
The dairy market in Uganda has both the formal and informal sectors playing significant and often competing roles. FILE PHOTOs
What you need to know:
The informal distribution chain dominates the industry as the formal one makes in-roads and despite production growing, the demand is still more than the supply. While there is much progress, the challenges still exist. This is the picture of Uganda’s dairy sector.
From the 1990s, the dairy sector has undergone various transformations with the annual milk production more than doubling, demand ahead of supply, constant rises in prices and the cattle populations increasing over the years.
Research carried out by the Economic Policy Research Centre (EPRC), Makerere University, shows that the growth in milk production is attributed to an increase in cattle population rather than increased productivity per cow.
In the eastern region, for instance, in 2005/2006, 100 million litres were produced and this increased to 159 million litres in 2009/2010.
Releasing the findings at a dissemination workshop, attended by various participants, including veterinarians, agriculturalists, representatives of dairy businesses, and farmers, Mr Swaibu Mbowa, a researcher at EPRC, said milk production has increased from 431,000 litres in 1990 to 1.6 billion litres.
Stiff demand
“Raw milk supply has continued to increase because of tremendous transformation and the sales have taken the same trend,” he said.
Ms Elizabeth Birabwa, programme manager, EPRC, added that the growth in the sub-sector is mainly due to liberalisation and the change in policy environment.
The study was conducted in Kamuli, Mbale, Sironko, Bududa, Jinja, Soroti and Ngora in the east, Gulu, Apac and Nebbi in the north, and Bushenyi, Mbarara, Ntungamo and Sheema in the west. It also reveals that the processing capacity of other milk products has increased thus causing a stiff demand of the commodity.
“The processing capacity has increased and we are now evacuating more milk in the country than before as processors reach distant markets,” Mbowa explained that the sector is also experiencing a gradual change as the formal sector tries to yank the business from the informal sector, which has dominated it for decades.
Tastes and preferences
The near-monopolist structure of the collection and processing where Sameer Agricultural Livestock Limited controls 78 per cent of the formal raw milk marketing channel, has provided other processing companies such as GBK and Shumuk with incentive to invest in infrastructure.
A case in point is the factories being constructed in Kampala, Mbarara and Kiruhura districts to boost processing capacity.
He also attributed the increase in demand to a rise in per capita milk consumption: “Uganda has had the lowest per capita milk consumption (about 50 litres a person per annum) in the region. But now, it is steadily rising due to the growing middle class and the differing tastes and preferences of various dairy products.”
Of note is urban dairy consumption going from 30 per cent to 40 per cent due to continued encouragement by health workers for people to consume dairy products.
However, despite expansion in production capacity, the challenges still abound. Mr Benard Mujasi, the Mbale LC5 chairman, cited the Bugisu sub-region where the processing is not supported with the necessary equipment like coolers. This is in addition to prevalence of disease.
“The farmers are faced with a number of challenges especially Nagana that has indeed left them in a fix despite efforts to re-stock with improved breeds for milk production” he said. “The eastern region would be doing well but it’s being underserved by the infrastructure and slow intervention to control tsetse flies as well as inadequate supply of heifers”.
Critical issues
He further explained that widespread lack of preservation and processing equipment especially in eastern and northern regions remains a big challenge. There is also the issue of low farm-gate prices offered to farmers especially during peak season in relation to the costs of inputs.
These are critical issues affecting farmers that should be addressed to make the diary sector an economically viable business. According to a 2010 study done by Diary Development Authority, Uganda loses $23m (Sh50b) annually because of milk spillage due to contamination.
However, a section of participants demanded that government responds to the shortage by building factories and providing better breeds to farmers to stimulate production.
