Brookside Dairies, the milk processor majority-owned by the Kenyatta family, has been dealt a further blow after the Tanzanian government banned its operations in the country and imposed an over 1,000% levy on milk imports.
According to reports from Kenya’s southern neighbour, authorities accused Brookside Dairies representatives in the country of reaching an unfair arrangement to sustain its operations.
The Ruiru-based company had last year announced it was exiting the Tanzanian market by selling its entire stake in Brookside Tanzania to French partner Danone, which owns a 40% stake in the firm. The Abraaj Group, a Dubai-based equity firm, owns 10%.
At the same time, Tanzania has made it difficult for importers of finished milk products to operate in the country by raising import fees from Tsh 150 to Tsh 2,000, a 1,233% increase. The raise became effective on October 1 after Livestock and Fisheries minister Luhaga Mpina signed Animal Diseases and Animal Products Movement Control Regulations in August.
Brookside gained a footing in Tanzania after it acquired the Arusha plant of the defunct State-owned Tanzania Dairies, promising to rehabilitate the firm and eventually install an ultra-heat-treated (UHT) milk processing factory but instead turned it into a collection depot citing low milk supply.
President John Magufuli soon got impatient and declared it was not fair for Brookside to collect milk from Tanzania, process it in Kenya and then sell back to them at a higher price.
“How many dairy firms do we have that are operational? Do you remember the Brookside company in Arusha? It used to collect milk from the Maasais in northern parts of Tanzania, take it to Kenya for processing then bring it back to us to drink… Enough is enough,” he told Tanzania Private Sector Foundation in 2015.
The latest move has alarmed stakeholders who say it may discourage the consumption of milk and other dairy products in Tanzania.
Local milk plants are capable of processing 700,000 litres daily but are working at only 40% of their installed capacity due to a shortage of milk, among other reasons.
“Local production cannot match demand and the new fees will restrict importation of milk among processors. We will have to fight for what is available locally,” one stakeholder told Tanzania’s The Citizen newspaper.
New KCC’s Tanzania country manager Marigo Chacha says the impact will hurt suppliers who have invested a lot and created jobs.
“Tanzania imports butter and ghee from other countries as there is no local processing. If other countries decide to restrict our products through moves like this then it can spark a trade war,” he told the newspaper.
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