SNV's Rinus shares his thoughts on why dairy may soon replace coffee and tea as the lead export in Uganda.
The dairy sector is slowly inching its way into Uganda’s top exports, next to coffee and tea. The pull of the exporters is largely responsible for this transformation. In the last 10 years, the value of milk and milk products exported from Uganda has increased astronomically from $5 million USD in 2008 to 130 million USD in 2017. Dairy exports in 2017 amounted to approximately 300 million litres, which is more than 10% of the total milk produced in Uganda; currently estimated at 2.5 billion litres per annum.
The dairy sector is currently growing at an average of 7% per annum, with some areas in South Western Uganda averaging at 10 – 15% per year. The growth in the sector can be attributed to favourable natural conditions as well as dairy development programmes instituted by government and development partners.
However, while government and donors have consistently given support to the dairy sector, in some instances directly through investments in infrastructure like milk coolers, and indirectly through construction of roads to ease transportation of milk; these interventions did not create the transformation that is being witnessed currently.
Liberalisation of the market created space for the emergence of small and medium-scaled companies that catered to the domestic market but their influence remained limited. Even the privatisation of the National Dairy Corporation did not bring any drastic change. The government monopoly was replaced by the dominance of one processor (Brookside) in the market.
This situation only changed with the establishment of two processing factories in Southwestern Uganda by Pearl Dairies and Amos Diaries. Pearl Dairy established a factory in Mbarara, and quickly captured a market by exporting milk powder and other products to a wide variety of countries, including the Arabian Gulf, Nigeria and Japan.
The second processor, Amos, focused on extracting casein out of milk and exporting this to the American market for industrial use. Together with the medium-scale processors and exports by Brookside to its Kenyan mother company, Uganda’s dairy export earnings sky rocketed.