Gulu dairy farmers change strategy in response to low milk demand

Dairy farmers in Gulu are reconsidering changing their business plan to adjust to emerging market conditions, following a crash in milk demand amid the Covid-19-related strictures during the past three months.

When Uganda instituted a lockdown following the pandemic, a critical part of Gulu’s dairy chain was broken. Schools, restaurants, workplaces and household that used to be voluminous buyers either halted, or greatly cut down, their demand for milk.  

Gulu Country Dairy, a leading dairy producer, which currently holds the largest functional milk processing plant in Acoli sub-region, was forced to close one of its two outlets in Gulu town due to low sales of their milk and yoghurt. 

Sharon Abalo, the sales representative at Gulu Country Dairy told theCooperator that before COVID-19 broke out, the outlet that she manned had a daily sales target of 150 litres of milk and about 100 cups of yoghurt every three days. 

“But now we sell between 30 to 50 litres of milk, and most of our regular clients who used to buy milk daily have cut their consumption to once or twice a week,” Abalo said.

The dairy operator has even stopped supplying supermarkets that used to sell their yoghurt as well as all the other places such as Bweyale, Kiryandongo, Kamdini, Elegu and Kitgum.

Dr. Tonny Kidega, the Managing Director of Gulu Country Dairy says that they used to supply 350 litres of milk and more than 400 cups of yoghurt daily to schools in the area, but  now that schools are closed, they have stopped producing yoghurt and started selling milk from house-to-house.

In fact, at one point early in the lockdown, the dairy processor was forced to dump litres of unsold milk out of sheer frustration.

While the action may have seemed wasteful, the dairy’s management says it was the only way out. 

“We wanted to distribute the surplus milk free of charge, but people rejected it out of lack of trust,” Abalo explained.

To avoid discarding more of its unsold milk, the dairy started donating it to Lacor Hospital, Gulu Regional Referral Hospital and St. Jude baby’s home, once or twice a week.

Milk Matters, another prominent player in Gulu’s dairy market reported a similar drop in demand for milk. 

The company has reduced, from six to four, the farmers that used to supply them between 250-300 litres which they sold in a day. Now Milk Matters only purchases 140 litres of milk at a time, which takes a minimum of two days to sell out.

New strategy 

As they struggle with low demand for milk, dairy farmers and entrepreneurs in Gulu are rethinking their entire business approach, from their product offering to marketing and distribution strategies in order to stay afloat in the post-COVID economy.

For instance, Dr. Kidega reveals that before COVID-19, Gulu Country Dairy was planning a complete switch to yoghurt production, in line with the company’s business growth plans.

“We didn’t want to identify as just ‘raw milk producers’, because I thought that selling raw milk was the lowest thing we could do,” he says. 

However, Kidega says the ongoing crisis has forced them back to selling raw milk, because the schools, which used to be their major buyers of yoghurt, are still closed.

The online market has been another revelation for the company.

 “The crisis has taught me that I can market my products online. This is a group I had ignored, but every day, households order for milk online and the next morning my team is at their doors,” he says.

“Moreover, Kidega reckons that doing door-to-door deliveries for online clients is a cheaper and more sustainable way to do business because then the company spends less on cooling.

Already, the new approach is bearing fruit.

“Because of the online marketing, our milk demand is picking up. We are able to sell 200 litres a day. Even after Covid-19, we are going to continue with online marketing, because it has become the in-thing,” Kidega said.

The company has also ventured into breeding cattle for sale to a new clientele that was pushed into farming because of the lockdown and due to loss of jobs amid the pandemic.

“I have been receiving many calls from people in need of good breeds of dairy cows. So, whatever we are breeding now will be majorly for sale,” he said.

Gulu Country Dairy Farm, which sits on a 40-acre piece of land in Unyama Sub County, currently has more than 40 dairy cattle and provides training services to smallholder dairy farmers in the region and beyond.

For Gulu Women Dairy Cooperative Society, the future is in diversifying their product range. According to Joska Otto, the Co-op’s vice-Chairperson, says they now want to start making other milk products that have a longer shelf-life such as ghee and UHT milk.

The 200-member cooperative has a milk processing plant that can process up to 10,000 litres of milk daily in addition to producing yoghurt, ghee and cream.

Otto says although the Shs 925m machine is still down due to technical problems, they will use it to produce long-lasting milk products once it is repaired.

“Our machine has a big and multi-functional capacity. We plan to use it to make milk products to supply in Acholi sub-region and beyond,” Otto said.