July 10, 2013

Uganda's milk prices increased exacerbated by the commodity's scarcity across milk-producing corridors, as well as an increase in demand from large processors, and the increase in the cost of doing business, especially for processing firms.

Early last week Sameer Agriculture and Livestock announced a 45% increment in its milk prices, indicating that it would be effective July 1, vend a litre of milk at UGX850 (US$0.33) for bulky and wholesale buyers.

The move has been attributed to increasing demand for milk products in the region as well as the need to improve standards and manufacturing capacity. The new prices are likely to momentarily boost farmers' incomes that in most cases get a raw deal especially during times when there is plenty of milk on the market.

Apart from Sameer Agriculture and Livestock increment, prices have increased in much of the country with a litre going for UGX1,000 (US$0.39) up from UGX300 (US$0.12). This, according to industrial experts, is one of the highest prices that have been recorded at farm–gate in years. The prolonged long dry-spell resulted into lack for animal feeds and water, thus affecting production in much of Uganda's milk producing corridors.

Jolly Zaribwende, the Dairy Development Authority (DDA) executive director, told Prosper last week that the dry-spell has affected the production capacity across the country by about 35%."

However, she said "The increase in prices is good to farmers as demand continues to grow exacerbated by growing demand from processors. Farmers now have the bargaining power due to the fact that they are able to sell to the highest bidder."

Reports from South Western Uganda - one of Uganda's main milk producing corridors, indicate that production from the area continues to dwindle.

Steven Aikiriza, the South Western Uganda DDA regional manager, said the authority normally collects about 500,000 litres daily (50 trucks). This has however fallen dramatically. According to Aikiriza in Kabale a litre is selling at UGX700 (US$0.27), UGX600 (US$0.23) in Rukungiri while in Fortportal the commodity is vending at UGX1,000 (US$0.39). In Mbarara a litre is selling at UGX700 (US$0.27)."

The above milk producing corridors are some of Sameer Agriculture and Livestock main sources of milk.