THE FATE OF PEARL DAIRY AND WHAT IT SAYS ABOUT THE EAST AFRICAN COMMUNITY

It can be frustrating even down right infuriating when you are in the midst of a historic movement. Progress or regression doesn’t happen in a straight line. You take two steps forward and one step back. Sometimes it’s worse, you take two steps forward and four steps back.

I have heard it said that we will take the class until we learn the lesson. And may I add, even if you think you have skipped the class and gone on, invariably one day you will come all the way back to take the class, so you can learn the lesson.

At the time of writing this the Presidents of Uganda and Rwanda are getting set for a border meeting at Katuna, which we all hope will lead to the reopening of the border and the free movement of goods and people.

Rwanda shut down the border a year ago ostensibly over the maltreatment of its people in Uganda.

"When our grandchildren will be reading history this border closure may occupy only a line in the greater scheme of things. Hopefully it will not have scuttled the greater goal of creating a single regional market....

There are more disturbing movements that affect Ugandan progress but also don’t bode well for the future of the EAC.

Ugandan sugar is having to jump through hoops to find its way into the Kenyan and Tanzanian markets. We are the only country in the community that is producing a surplus. Three decades of rehabilitation and expansion of our sugar firms has brought us to this happy situation.

In our eastern neighbour the sugar industry is all but dead, with the major sugar producing regions in western Kenya, brought to its knees by a combination of bad policy and the growing strength of sugar importing cartels. Uganda’s sugar industry, I fear is under attack from similar forces.

Our neighbours cannot believe that we can produce so much sugar as we are exporting to them. They have sent delegations (per diems all around) here to verify our capacity to produce. They have not found any foul play but have gone back and kept quiet allowing the charade to continue.

Our grain is being shipped across the border raw. Attempts to export maize flour have suffered uncalled for speed bumps and roadblocks. The message is clear, send us your raw materials but not your finished products. And we all know who benefits from such an arrangement.

More recently our milk producers, Pearl Dairies, the maker s of Lato milk, came up against some strange “official” resistance to their exports to Kenya. Their warehouses were raided and their stock impounded at the end of last year. Kenyan authorities unofficially charged that they were counterfeit supplies, strange because Pearl Diaries were not the ones complaining. But maybe that was because it was their milk.

But one can see what has happened. Last year Uganda exported in excess of 110 million liters of milk to Kenya, which helped for the first time since anyone remembers, to turn the balance of trade in our favour. This was particularly surprising because the previous year we had only exported about 20 million liters to our eastern cousins.

In the space of two and half years, by the end of last year, Pearl Dairy controlled about a quarter of the Kenyan milk market. That must have rustled a few feathers, especially that Pearl Dairies with their 800,000-liter day processing capacity in Ntungamo was not about to let up.

Then the stories begun again. Uganda is getting milk from Australia landing it in Kinshasa, trucking it through South Sudan before it comes to Kampala for reconstitution (adding water) and shipped to Kenya. If milk can go through that convoluted journey and still price competitively in the Kenyan market, then the Kenyan dairy industry has only themselves to blame.

Strangely, or not, other exporters of milk to Kenya from Uganda are not suffering such inconveniences or whisper campaigns.

We should be concerned.

One of the biggest selling points of the EAC on paper, is that investors can come and locate their plants wherever they choose in the region and have unfettered access to a 200 million people market.

The way it seems that’s for everybody else except Uganda.

If you have $50m to invest, like Pearl Dairies has done and want to invest in Uganda to exploit the EAC market, don’t bother.

Which is sad.

It does not take a stretch of imagination to workout that in order to fulfill its 84 million litre exports to Kenya, like they did last year, there must be hundreds of farmers in the Ntungamo area and hence thousands of their dependents in whose best interests it is to have the plant there working at full capacity. At the height of production last they inject at least sh12b into the local economy every moth.

Beyond that there are transporters, retailers, people up and down the value chain that want, no, need Pearl Dairy to remain in production.

But maybe we shouldn’t be surprised. It is no myth that Uganda’s agricultural potential is unmatched in the region. Our benign weather and arable soils mean that we are potentially the lowest cost producer of anything agricultural.

"Kenyan industry, which took advantage of the chaos of the 1970s and 80s, kept us a captive market for everything from toilet paper to sauce pans are fast waking up to an uncomfortable reality....

The lesson of the EAC obviously is that government needs to investigate in its negotiating capacity.  It can’t be for individual companies to be negotiating for market access, this is the business and role of governments.

Especially in our case where we have been the foremost champions of the creation of the EAC.