Farmers worry of drop in the price of milk, as peak season sets in

MBARARA, Uganda: Cooperators under the Uganda Crane Creameries Cooperatives Union (UCCCU) are worried of an emerging high peak Milk season that is threatening to slump the prices of milk even further, leaving them with huge loses.

The Chairperson Board of Directors of UCCCU, Mr. Nuwagira George William told theCooperator that the union members alone have been producing over 200,000 liters of milk per day, but are now producing more which has overwhelmed all the milk processing plants in area.

“We are already worried, both as farmers and union members. As we talk most farmers, who are our members are already being turned away from the few milk processing plants where they have been supplying, because of oversupply.” said Nuwagira

UCCCU has over 18,000 farmers spread in 10 districts in South western Uganda, and currently has 138 registered Primary Societies.

The Cooperator has learnt that most of the cooperators have been supplying their milk to Pearl Dairies Factory, Lakeside Dairy, Amos Dairies, GBK Dairy, Paramount Dairies, and Vital Tomosi Dairy Limited, all located in Mbarara and Kiruhura Districst.

Of these, only Pearl Dairies has a processing capacity of 500,000 liters a day. The other with the same capacity is Fresh Dairy, based in Kampala. The other big plant – Amos Dairies consumes 400,000 liters and only produces anhydrous milk (fat, ghee, casein and Whey) for export.

Nuwagira noted that even when combined, the milk processing plants in Uganda cannot consume all the milk generated in South Ankole. “The plants can only process up to 35% of the milk that we produce. The remaining 65% is consumed raw,” he said.

Present Figures

According to the Dairy Development Authority (DDA), the dairy sector in Uganda is currently growing at an average of 7% per annum, with some areas in South Western Uganda averaging at 10 – 15% per year and if this trend continues, Uganda will become Africa’s largest dairy exporter in the next five years.

The dairy sector is slowly etching its way into the top tier of Uganda’s top exports, and ranks after coffee and tea as the leading agricultural exports. In the last 10 years, the value of milk and milk products exported from Uganda has also increased astronomically, from $5 million USD in 2008 to 130 million USD in 2017.

In 2017, dairy exports 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 growth in the sector has been attributed to favorable weather patterns, as well as dairy development programs instituted by government and development partners, like the increased focus on attracting investors into the milk processing industry.

In particular, the emergence of Brookside dairies, and later the establishment of Pearl Dairies and Amos Diaries both processing plants in Western Uganda, was a game changer. In 2012, Pearl Dairies quickly established a factory in Mbarara, and quickly established a foothold on the 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 Dairies, 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.

Why the worry now?

While industrialists have welcomed the impressive growth of the sector, there’s fear that increase in production has not been matched by corresponding increase in demand, leaving farmers decrying low prices for their milk. Last year alone, the country produced over 2.7 billion liters of milk, but could only consume 800million liters locally.

According to Nuwagira, the peak season starts with the March – May rains. In this time of the year, it is estimated that total production across the country peaks at between (1.3-2) million liters of milk per day. Yet combined, all the 10 leading milk processing plants across the country can only process 1,645,000 liters of milk per day.

This, Nuwagira says, is the source of the farmers’ worry. “Ordinarily, the price of a liter of milk varies between shs.600-700. But it may drop to as low as shs.200-300 when the peak season sets in.”

Milk Production

In terms of milk production, Uganda is divided into six milk sheds based on the differences in geographical agro ecological characteristics, market dynamics and cattle population.