Protracted trade dispute between Nairobi and Dar es Salaam has hit Kenya's dairy sector hard with the value of exports to Tanzania dropping by 80 per cent between 2014 and last year.
Data from the Kenya Dairy Board (KDB) indicates exports to Tanzania dropped to Ksh130 million ($1.3 million) last year from Ksh648 million ($6.3 million) the previous year. The regulator attributes the reduction to trade restrictions by Tanzania on Kenyan products.
Tanzania is one of the key markets for Kenyan milk products but Dar es Salaam has imposed tariffs that make it hard for dairy product to access the market. Dar es Salaam levies Ksh10.25 ($0.1) for every kilo of milk exported.
“These tariffs need to be abolished because they are taking a toll on the products that we export to Tanzania. This is not in the spirit of the East African protocol that allows goods from regional states to access any of the market without restrictions,” said KDB managing director Margaret Kibogy.
The MD noted that Tanzanian milk products do not attract levies when entering the Kenyan market, adding that Tanzania should reciprocate the gesture.
KDB said trade between the two countries kicked off well this year but the ongoing standoff, if not resolved soon, will drastically eat into export earnings.
In the first half of the year, dairy exports to Tanzania earned Kenya Ksh141 million ($1.4 million), surpassing what was recorded in the 12 months of 2016.
This week, Tanzanian officials put off a meeting intended to iron out issues fuelling trade dispute with Kenya.
Representatives of the two countries, including officials from cross-border trade agencies, were expected to meet from Wednesday in Tanzania, according to an agreement reached on August 3.
Tanzania has been Kenya's second largest market in the region after Uganda, providing sale outlets for a range of products that include palm oil, soap, medical drugs, cooking fats, iron sheets, sugar confectionery, and margarine.