By NJIRAINI MUCHIRA

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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.