Ugandan dairy company targets Ethiopia, Malawi and South Sudan

Pearl Dairy Farm Limited (PDFL), the largest dairy processor in Uganda, is expanding into Ethiopia, Malawi and South Sudan. The company, which markets its products under the Lato brand, is also looking at export markets as far afield as Algeria.

Pearl Dairy manufactures milk powder, liquid milk, yoghurt, flavoured milk, butter, butter oil and ghee at its plant in Mbarara, in western Uganda. The plant has a daily processing capacity of 800,000 litres of milk. The company, which was founded in 2009, started exporting to Egypt, Kenya, Tanzania and DRC in 2015. It entered Burundi in 2018.

According to General Manager Bijoy Varghese, Pearl Dairy has received regulatory approval for sale in each of its three new target markets. Initially, the company will only sell milk powder and yoghurt in Ethiopia, Malawi and South Sudan. It has cited the Africa Continental Free Trade Area (AfCFTA)  and the promise of tariff-free trading as a key driver for its expansion.

In December 2019, Kenya put a 16% VAT charge on imported milk from Uganda. The move came because Kenyan dairy farmers believe they are being undercut on prices by farmers in Uganda. The same month Kenyan Police, Kenya Bureau of Standards and the Kenya Revenue Authority went round stores in Nairobi and removed packets of Lato powdered milk from shelves, saying they are substandard, in what was clearly telegraphed as a political move.

Uganda produced around 2.6bn litres of milk in 2018, of which around 144m litres are sold in Kenya in an export business worth around $80m. According to Uganda’s Agriculture Sector Strategic Plan 2015/16 – 2019/20, which set production targets for priority and strategic agricultural commodities, it has a target to produce 3.3bn litres of milk in 2020. It probably won’t hit that target because yields per cow are not increasing, but the overall pattern is one of increase: Uganda produced only 1.6bn litres of milk in 2016.