Market News

Uhuru’s directive quashes 16pc levy on Ugandan milk

New KCC factory
A worker at the New KCC factory in Kiganjo, Nyeri sorts milk powder cans on July 6, 2019. PHOTO | GRACE GITAU 

President Uhuru Kenyatta has slammed brakes on the 16 percent duty set to be imposed on milk imports from Uganda, implying that local dairy farmers will have to grapple with the influx.

Mr Kenyatta has directed the duty only be levied on milk products coming in from outside the East African Community (EAC).

The announcement overrules proposals of a verification mission that went to Uganda at the tail end of last year, which called for the duty on imports to protect farmers.

“To protect our milk producers from illegal imports, I have directed National Treasury to impose 16 percent VAT on milk products that have originated from outside the EAC,” said the President in his address on Tuesday.

The delegation to Uganda, led by then Trade PS Chris Kiptoo, was drafting a report to present to the cabinet.


“We have proposed a 16 percent duty that would be levied on Ugandan milk as we seek to protect farmers from increased competition,”

“We are making a report that we shall present to the Cabinet for approval,” said Dr Kiptoo.

Mr Kenyatta directed the Kenya Bureau of Standards and the Directorate of Criminal Investigations to impound any powdered milk or dairy products that do not meet Kenyan standards.

Milk prices have fallen by 33 percent in the last one year as processors cut the amount paid to farmers, citing a sharp increase in production.

A litre of milk is going at an average of Sh20 across the processors from a high of Sh37 in 2018.

Mr Kenyatta also directed the National Treasury to release Sh500 million for mopping up excess milk in the market and a further Sh575 million for modernisation of two New KCC milk plants, one in Nyeri and one in Nyahururu, to enhance processing capacity.

“In sum, my intent is to boost the milk industry with Sh1.07 billion in the immediate run as a way of supporting their efforts,” he said.