Ugandan brands like Lato are now common in Kenya. PHOTO | COURTESY
Ugandan milk exporters are slowly eating into the Kenyan dairy
market, with Lato Milk and Fresh Dairy making significant inroads, into
the low-income segment of the population.
The EastAfrican
found that Lato UHT Milk, which has a shelf life of 90 days without
refrigeration and retails at $0.49 for a 500ml packet, is the dominant
brand in most neighbourhood kiosks in Nairobi’s densely populated areas.
“There
is a significant increase of Ugandan milk in the Kenyan market, mainly
driven by lower production costs in Uganda, which allows processors to
sell their products at low prices,” said Kenya Dairy Processors
Association chairman Nixon Sigey.
Uganda is a key
exporter of milk and milk products, with the value of exports rising
from near zero 10 years ago to about $80 million currently.
Three
years ago, Kenya was the main export market, accounting for 80 per
cent. But with the growth of the dairy sector, Uganda has diversified
its export markets, with Kenya now accounting for 40 per cent.
Fresh
Dairy, which is jointly owned by Kenyan giant Brookside Dairy and the
Ugandan government and the country’s leading processor with a capacity
of 560,000 litres per day, is among the top exporters. Its exports grew
from $13 million in 2015 to $18 million last year.
Expanding to Kenya
Pearly
Dairy, Uganda’s second largest processor owned by Midland Group of
Dubai, has a daily capacity of 500,000 litres, and plans to invest in a
processing plant in Kenya.
According to Rinus van
Klinken, project manager of the Netherlands-funded Inclusive Dairy
Enterprise (TIDE) project in Uganda, the country is rivalling Kenya due
to its approach to dairy farming.
While many dairy
farmers in Kenya use the zero grazing system, their Ugandan peers have
adopted the extended grazing system, which has significantly increased
milk production while keeping costs low.
Mr van Klinken
said that the increase in the number of milk processors has resulted in
a ready market for farmers, pushing farm gate prices to a high of $0.34
from a low of $0.10 a few years ago.
This, in effect, has pushed milk production from about 500 million litres in 2015 to 2.2 billion litres currently.
Mr
van Klinken added that while Ugandan processors are fast growing their
Kenyan market, efforts to penetrate Tanzania and Rwanda are being
hampered by non-tariff barriers.
“Milk is not flowing freely in accordance to the Common Market Protocol, mainly because of non-tariff barriers,” he noted.
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