Kenya re-opens its doors for return of Uganda’s Lato milk

Workers load cartons of counterfeit Lato milk

Workers load cartons of counterfeit Lato milk products that were nabbed by DCI officers at a warehouse at Sabuni road in Kisumu County on January 17, 2020.

Photo credit: Tonny Omondi | Nation Media Group

Kenya has allowed Uganda’s Lato milk to invest in local dairy factories as the State ramps up competition in the dairy sector which government officials have constantly complained is dominated by one player.

Trade and Investments Cabinet Secretary Moses Kuria yesterday held bilateral talks with Uganda’s Treasury Permanent Secretary Ramadan Ggoobi where the two countries promised to work together to boost their respective dairy sectors.

The ministry yesterday said Lato, a leading milk processor in Uganda which had significantly penetrated the Kenyan market, has signed a deal with the State-owned financier Kenya Development Corporation (KDC) to invest jointly in dairy ventures.

“The meeting focused on mutual economic and investment objectives by the two countries as a follow up to the various bilateral meetings between to facilitate regional co-investment opportunities in strategic sectors,” said Mr Kuria.

He said Lato will invest in Kenyan milk factories that are currently struggling in a bid to revive them in what will see the Ugandan firm take the fight for control of the lucrative milk sector to the doorstep of some well-known local dairy brands.
Brookside Dairy Limited is Kenya’s largest milk company and controls a market share of 40 per cent, according to the Competition Authority of Kenya (CAK).

New Kenya Cooperative Creameries (New KCC) manages a 25 per cent share while Sameer Agriculture and Livestock controls 14 per cent of the market.

Others include Githunguri Dairy Cooperative (12 per cent), Pascha-Uplands Premium Dairies and Food (1.7 per cent), Musty Distribution (3 per cent), Doodla Dairy Kenya (0.9 per cent) while others have a 3.4 per cent market share.

Joint planning

The Trade Ministry said Kenya and Uganda agreed to joint planning of raw materials between the two countries to ensure all-around supply in a bid to facilitate competitive production.

The Mbarara-based Lato was established in 2012 by Pearl Dairy Farms which is owned by Midland Group.

Midland Group is owned by the families of tycoons Bhasker Kotecha (50.5 per cent) and Anand Kapoor (49.5 per cent) according to disclosures by the International Finance Corporation (IFC).

IFC extended the company a $6.5 million (Sh855 million at the current exchange rate) loan to set up the state-of-the-art Uganda milk processing plant.

Additionally, Kenya and Uganda agreed on the exemption of importation fees and levies on strategic commodities in Kenya to boost food security and integration of the commodities exchange between the two duos.