KAMPALA – The Food and Agriculture Organisation of the United Nations (FAO) and Dairy Development Authority (DDA) alongside other key stakeholders have concluded a round of regional and national policy dialogues aimed at improving Uganda’s dairy sector.
The dairy sector in Uganda plays a vital role in household nutrition and income levels. It represents 6.5 percent of the country’s agricultural Gross Domestic Product (GDP). Dairy production is dominated by rural small-scale farmers. Hiwever, only about 20 percent of the milk is processed into higher-value products.
According to DDA, Uganda’s revenue from the export of dairy products has risen sharply, by 63 percent in three years (2018-2020). Dairy exports now account for 8 percent of total export value. Stakeholders at the dialogues said time is now ripe to help the sector reach its full potential.
The AgrInvest initiative of FAO and the European Union has put a fund to attract sustainable private investments but also supports improvements in key agrifood sectors such as dairy value chain.
During the regional meetings, held in Mbarara and Wakiso, FAO officials presented the results of four economic and policy studies that highlight a range of issues in the dairy value chain.
“The AgrInvest Project in Uganda supports existing policy dialogue platforms, or at least platforms in the making, in partnership with key stakeholders. These platforms enable public and private dairy value chain stakeholders to strengthen their voice, articulate their investment needs and take the advantage of economies of scale by working together. Such collective action can boost the commercial dairy sector,” said Martin Maugustini, AgrInvest Uganda Project Coordinator.
“These dialogue platforms also aim to identify possible investment opportunities for investors, such as the Ugandan Development Bank (UDB) with whom AgrInvest is partnering,” he added.
The studies included analyses of price incentives for milk producers and traders, the performance of the Milk Collection Centres (MCC), post-harvest loss in the milk and dairy sector, and domestic dairy consumption.
In the East African Community, Uganda ranks third in milk consumption, behind Kenya and Tanzania, with each Ugandan on average, consuming 64 litres per year. FAO’s and World Health Organisation’s recommended milk intake per person per year is 200 litres.
“Milk is a vital source of nutrition and many Ugandan farming households get their income from the sale of milk and dairy products. Through this package of policy studies, stakeholder dialogues and the action plan devised, Uganda has access to strong evidence on the reforms the dairy value chain needs and the strategic targets for future investments,” said Thibault Meilland, Economist and Policy Advisor with the FAO Monitoring and Analysing Food and Agricultural Policies (MAFAP) programme.
“This will ultimately make milk producers better off with higher incomes, better milk-handling practices along the value chain, and better-quality milk and dairy products for local consumers and export markets,” he added.
On milk prices, FAO economists found that the current effects of trade and market policies have led to milk producers earning prices around 7 percent below international equivalents since 2013, but down from around 50 percent less in 2005.
Nevertheless, dairy farmers were affected by excessive market access costs – 40 percent of producer prices – such as transport, informal fees and high-profit margins by traders.
Improving transport infrastructure and logistics services, diversifying export opportunities and promoting cooperatives are a few policy recommendations shared.
In Uganda, the 475 MCCs play a key role in integrating resource-poor milk producers into the commercial dairy value chain. The study identifies various bottlenecks such as limited access to clean water supply in rural areas, low access to stable energy supply for milk processing, morning only deliveries, better financial management systems, high operating costs, and underuse of cooling systems.
Post-harvest losses of milk were most likely to occur at the level of MCCs and the farms. Recommendations to curb milk losses include; increasing investment in technology and best practices for milk handling, storage and transportation, as well as better enforcement of the regulatory framework to improve milk quality. Officicals said these would supply the currently under-utilised domestic processing capacity and boost the potential of an already dynamic export-oriented dairy production system.
“The recommendations from the dialogue will help all the value chain actors to address some of their challenges but also provide an avenue for developing a policy action work plan that addresses issues of price incentives, low milk consumption, post-harvest loses, milk collection centres among others,” said DDA’s Principal Planning Officer Kenneth Okital.
The next steps, in the form of a policy action plan for the dairy sector devised during the meeting in Kampala, will help DDA and financial institutions such as Uganda Development Bank to inctrease their agricultural loan portfolio with targeted reforms and investment in the promising dairy sector.
https://thecooperator.news/new-study-calls-for-investing-in-high-potential-commodities/
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