Kampala, Uganda | URN | Kenya has slapped a 16 per cent Value Added Tax (VAT) on Ugandan milk so as to protect their local market.
Last week, Kenyan officials were in Uganda for a verification exercise to see whether the glut of milk entering their country was actually being produced in Uganda.
Uganda Trade ministry officials could not disclose what was deliberated on in the Kampala meeting. But Kenya’s principal secretary in the department of trade Chris Kiptoo told Kenyan media on Friday 20th evening that they “deliberated on possible measures to remedy the concerns of Kenya and agreed that VAT be imposed on milk imports into Kenya.”
When contacted, Uganda Dairy Development Authority boss Dr Jolly Ziribwedda played down the issue Kenya has with Ugandan milk, telling us “all was well.”
Uganda has seen its milk production grow tremendously with reforms in the dairy sector to 2.6 billion litres a year in 2018. At least 144 million litres are sold in Kenya every year, according to industry estimates. Kenyan companies like Brookside and Fresh Dairy are big processors of milk exported there.
But Kenya has seen its production leap up to more than 5 billion litres a year. In particular, production has been so high from April this year because of favourable conditions, depressing local prices but also prompting the country to look for ways to protect local farmers.
Read Also: Milk prices soar in Ankole
The tax means Ugandan milk will be more expensive in Kenya, compelling consumers there to go for the local brands. On the Uganda side, it means more depressed prices for the dairy farmers who are already crying over the Shs 400 per litre they are earning. Milk prices have fallen from the Shs 800 per litre at the start of the year.
In October, President Museveni told dairy farmers that he had secured a market in China. This is yet to come through. Milk is one of the thorny issues that East African countries are battling with for a while, many having to bend the east common market protocol provision of the free flow of trade to protect their market.
In 2010, Kenya blocked milk from Uganda to protect fits farmers. In 2017, Tanzania placed a $0.9 tax on every litre of milk from Kenya to protect its farmers. This year, each country is looking to protect its own.