Uganda has threatened to reconsider her position on the East African Community Customs Union Protocol and impose retaliatory taxes after Kenya seized its milk products on their market.
On Wednesday, Uganda, which is Kenya’s biggest trading neighbour in the region, sent a protest note to Nairobi demanding the immediate release of the consignments and expressed deep concern about “illegal seizures of Ugandan-made milk products under the Lato brand.”
The Ugandan ministry of Foreign Affairs strongly condemned the seizure saying the move caused “heavy financial losses to the company”. Goods worth over Sh36 million ($360,000) have been confiscated, over fears that they are contraband, counterfeit and substandard the Ugandan ministry said.
The Ministry of Foreign Affairs wrote to the Kenyan High Commissioner in Kampala, protesting Kenya’s continued behaviour to impose unwarranted tax restrictions on milk and other dairy products exported to the country.
“The government of the Republic of Uganda protests the manner within which authorities in Kenya have continued to deliberately constrain and impose unwarranted restrictions on the smooth importation of Uganda’s milk and milk products into Kenya,” the letter reads in part, Daily Monitor reported.
Uganda added that the decision by Kenya “contravenes the principle of good neighborliness” and Kenya’s obligation under the treaty establishing the East African Community, Customs Union protocol, Common Market protocol and World Trade Organisation trade facilitation agreement.
“This has resulted not only into confiscation of 54,310 kilos of powder milk valued at $203,630 and 262,632 litres of UHT milk valued at $157,106 but also have witnessed a sustained negative campaign against Uganda’s milk and milk products, contravening the principle of good neighbourliness and Kenya’s obligations under the Treaty Establishing the East African Community, Customs Union Protocol and Common Market Protocol and the WTO Trade Facilitation Agreement,” the protest note read in part.
Kenya blocked Uganda’s milk and dairy products, particularly Lato Milk on claims that Ugandan companies are exporting counterfeit and substandard products.
Over the last two weeks, Kenya has seized 262,632 litres of Ugandan milk valued at $157,106 (about Shs573m) and 54,310kg of powdered milk at $203,630 (about Shs743m).
It's still unclear whether Kenya has responded to the protest letter, Compared to Kenyan milk Ugandan milk is way cheaper due to cheaper production costs across the border thanks to the government of President Yoweri Museveni which has highly subsidized the sector.
Meanwhile, Kenya’s Agriculture Cabinet Secretary, Peter Munya has directed the new Kenya Cooperative Creameries to buy milk from farmers at Ksh33 up from the previous Ksh25.
Last year, farmers loudly protested and urged the government to regulate milk prices in the country so as to cushion them from exploitation and cheap milk from neighbouring Uganda.