Recent findings suggest that liberalisation of the Ugandan agricultural sector has created positive responses in the dairy sector. A study by the Economic Policy Research Centre (EPRC) has found that policies that took effect in the 1990s have increased total milk production, enhanced the variety of available dairy products and actually created growth in the related livestock sector as well.

In addition, through their value chain analysis study, EPRC scholars Dr. Swaibu Mbowa, Mr. Isaac Shinyekwa and Mr. Musa Mayanja Lwanga noted that that the development of the value chain in the dairy sector has led to employment creation and income generation not only for dairy farming households, but also for farm input dealers, dairy equipment dealers, dairy ingredients dealers, raw milk traders, milk transporters, mini-dairies, large scale milk processors, and distributors.

Total national milk production has grown from 460 million litres in 1990 to 1.6 billion litres in 2011, with per capita milk consumption growing from 16 litres in 1986 to 58 litres by 2010. Milk processing has increased, and a variety of dairy products previously imported now being produced locally.

Similarly, in the last two decades the livestock sector (driven largely by dairy) has maintained positive growth rates averaging 3 percent per annum compared to the declining (and often negative) growth rates registered in the food and cash crop sub sectors. Reasons for the growth in milk production are attributed to growth in cattle population, adoption of higher milk yielding cattle, growing number of households taking on dairy farming and changing husbandry practices.

Achievements accrued from Liberalization

Liberalization has seen the expansion of the milk collection network beyond the former Dairy Corporation limited (DCL) network that was transferred to Sameer Agriculture and Livestock Limited (SALL) in 1993. A number of private actors have joined the collection, transportation, processing and marketing of milk and milk products. Raw milk marketing has gradually undergone transformation from a government-controlled marketing system to a more competitive one in which private traders and processors play an increasingly active role.

Private sector businesses, cooperative societies and non-governmental organisations (NGOs) have become active players in the supply of essential inputs, crossbreeding and veterinary extension services. These players have complemented the limited role of government (which was the sole supplier of some key inputs like artificial insemination (AI) services and veterinarian drugs before liberalisation) in those activities and ushered in new services.

Farmer-to-farmer consultations enabled the flow of market information on essential inputs and product markets as well as adoption of technology. In addition to expanding milk processing plants, private milk processing companies that entered the industry after the reforms have invested in the milk collection and marketing infrastructure.

Constraints in the Milk Value Chain

However, despite the positive developments attributable to institutional and market reform policies, the dairy industry in Uganda still faces numerous constraints along the milk value chain. These obstacles include the limited use of improved new production technologies and management practices, aggravated by the shortage of essential extension services. In addition, for dairy traders, the limited incentive to enter the formal market value-chain leaves the bulk of milk (80%) in the informal market, which is difficult to regulate and enforce the required quality milk standards which stifles the processing of milk especially for the export market. In addition to the above challenges, the development of the dairy sector is further hindered by inadequate infrastructure e.g. poor roads networks and lack of electricity.

Recommendations

In face of the above challenges, the study proposes the following recommendations;

  1. Public investment in infrastructure development like roads and electricity is necessary to support integration of the raw milk market between regions. This will make the milk marketing more efficient.
  2. Promotion of public private partnerships (PPP) arrangements to expand the milk collection network where other processors have failed to invest.
  3. Mini-dairies organised and managed through farmer groups (cooperatives) as exemplified in the Northern and Eastern regions can augment the level of participation of dairy farmers deeper in the value chain. This model should be encouraged to further utilize processing capacity.
  4. Strengthening farmer groups as institutions central in the dissemination of information at farm level, and the revival of cooperatives by Government as highlighted in the agricultural DSIP.

 

Musa Mayanja Lwanga is a Research Analyst at EPRC.

 

 

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