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Uganda Dairy Processors in fear over declining EAC Market

Dairy processors in the country are incurring major losses due to unfair terms slapped on the its products by East African Community (EAC) Member States.

With more than 2.4m liters of daily processing capacity, processors had to source an expanded market in Kenya, Tanzania, Rwanda and other countries to be able to overcome lack of domestic demand for its production.

However, the unfriendly market forces from the neighboring countries continue to sink processors unto unprecedented losses, since its products’ biggest consumers have closed border (Rwanda) with Uganda while Tanzania has imposed a heavy import duty leaving milk processors and dairy farmers in heavy losses.

The dairy farmers are set to lose circa 300Bn and Uganda as a country is also likely lose more than 100 million U.S dollars in foreign exchange earnings.

Lack of market access automatically pushes the companies to scale down operations yet continues to face huge expenditures on taxes, salaries and other fixed overheads.

Collectively dairy processors had to let go of 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 processors 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, and which is against the common market framework.

And as a result, many processors are compelled to scale down its operations.

And such predicaments threaten the future of milk production in Uganda.

Government of Uganda should therefore step up and engage partner states in EAC, and also rigorously open up international markets for milk producers in Uganda.

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