Milk is a key contributor to improving nutrition and food security particularly in developing countries. The main milk products consumed in Uganda include pasteurized milk, UHT milk, cheese, cream and ice cream, yoghurt, cultured milk, butter and ghee.
Over the last decade, the dairy industry in Uganda has been one of the significant contributors to the growth of the Ugandan economy. It contributes about 9% of total agriculture GDP and about 3% of the country’s overall GDP. Of the GDP attributed to the livestock sub-sector, the dairy sector is estimated to contribute 45% and plays an important role as a source of food, income and employment. The sector employs over 700,000 dairy farming households.
Currently, the Dairy Development Authority estimates the production of milk to be at 1.7 to 1.9 billion litres, a substantial growth from the 460 million litres in 1990. Per capita milk consumption has grown from 16 litres in 1986 to 54 litres.
The increase in the consumption of milk is as a result of the increase in the milk processing capacity per day which has grown by nearly 460,000 litres following increasing local and regional demand for Ugandan milk and milk products. An increase in the number of dairy organisations engaged in milk bulking and processing has also boosted production and trade in milk and its associated products, which in turn has led to a big increase in dairy exports.
It is estimated that 70% of the milk produced in Uganda is sold commercially and the 30% balance is consumed on the farms by the farmers and calves. Of the 70% milk sold commercially, 80-90% is sold informally in unprocessed form. 150-160 million litres of the total 1.7-1.9 billion litres of milk produced annually is purchased by organised processors (8.4%). The main purchasers include small scale producers of yoghurt, ice cream, and cheese as well as big scale producers like Jesa Farm Dairy Limited, Paramount Dairies, Sameer Agriculture and Livestock Ltd and GBK Dairy Products (U) Ltd. This also includes a significant quantity of milk powder and some quantity of liquid milk exported to other countries.
Of the 150-160 million litres of milk purchased by organised processors in Uganda, approximately 38% of the milk is sold and consumed in Uganda (60 million litres) per year. The current per capita consumption of milk in Uganda is estimated to be at 54 litres which is low, compared to the world average of 104 litres. In neighbouring Kenya, the per capital consumption of milk is 120 litres. The World Health Organisation (“WHO”) recommends per capita consumption of 200 litres. Therefore, Uganda’s per capita consumption of milk is 50 litres below the world average, 66 litres below Kenya and 146 litres below the WHO recommended consumption.
In spite of the heavy capital investment made by the private sector in the dairy industry, the industry is at a nascent stage, not only does it need a lot of nurturing but also a lot of support from the various industry stakeholders. The government needs to play its role in ensuring that the industry is well formalised, promoted and protected till it is able to contribute as much to the economy as the other sectors such as the coffee, tea, sugar and tobacco.
The industry has major economic benefits to the entire country, not least of all in playing a major role in helping the country meet the food security targets set under the National Development Plan (NDP) and Vision 2040 and creating export markets for value added products. The industry also has a major role in rural development through dairy centres and assists the government in poverty eradication.
While the Agriculture sector employs 70% of the total labour force and contributes approximately 21% to the GDP, it was noted in the National Budget Framework Paper FY14/15 to FY18/19 that there is concern that production and productivity in most of the crop sub-sectors remains low, leading to poor returns to our farmers. Low productivity in the sector has also exacerbated the problem of food insecurity and malnutrition.