Ugandan dairy processor Pearl Dairy lays off 1500 workers as milk ban bites hard

UGANDA – Uganda’s leading dairy processor Pearl Diaries has been forced to lay off over 1,500 workers following stifled milk market access, after Kenya imposed a ban on the product imports from its neighbouring country over a year ago.

Uganda produces 2.6 billion litres of milk per annum. However, about 800 million litres are consumed on the domestic market leaving the surplus for the international market.

The recent past had witnessed an increase in supply of cheap milk from Uganda to Kenya, leading to local processors raise concerns on the negative impact this was having on sales.

“It’s been almost a year now that we are operating only on 25% capacity. We have been hit and that’s a big loss for a company.”

Seth Devendra – Managing Director Pearl Diaries

Kenya’s imports from Uganda more than doubled between 2016 and 2017 from Ush19.28 billion (US$5.24m) in 2016 to Ush42.04 billion (US$11.42m) 2017.

As at 2018, imports from Uganda to Kenya stood at Ush41.94 billion (US$11.39m). Exports to Uganda from Kenya on the other hand dropped from Ush62.16 billion (US$16.89m) in 2016 to Ush61.88 billion (US$16.81m) in 2018.

With the ban put in effect, Pearl Dairies one of the major exporters was severely hit, reducing its production capacity to currently operating on 25% capacity, critically affecting its income.

“We have been having almost 2,000 employees with us, which has gone down to 450 at present. People have lost jobs and the other related sectors like the logistics and transportations have also been affected.

“It’s been almost a year now that we are operating only on 25% capacity. We have been hit and that’s a big loss for a company,” Seth Devendra, Managing Director Pearl Diaries.

While the company was still struggling to deal with the ban, the world was hit by the COVID-19 Pandemic, which forced countries to close their borders and announce lockdowns to keep the virus at bay.

This meant that Pearl Dairy Farms, which was taking at least 400,000 litres per day, from farmers for processing, could no longer maintain the pace, reports Business Focus.

Farm-gate prices crashed and the price per litre of milk dropped from Ush .1200 (US$0.33) to Ush. 800 (US$0.22). The diaries were selling at Ush 1200 (US$0.33) per litre from Ush 1600 (US$0.44), a fall of Ush 400 (US$0.11) for every litre.

To offset the negative impact on the dairy sector, Pearl Dairy ventured into apiculture.

The company has revealed that its honey processing facility is 90% complete and will be commissioned beginning of April.

The producer of Lato Milk brand announced its diversification from the dairy industry last year, revealing that it will invest more than Ush10 bn (US$2.7m) into commercial honey production.

Under the project, Pearl Dairies plans to create about 4,000 job opportunities along the value chain.

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