Packed GMD yoghurt products ready for sale with a liter being sold at UGX 5,500.
By Arnest Tumwesige
NAKASEKE: Greater Luwero is steadily emerging as one of Uganda’s most promising dairy belts, with hundreds of thousands of litres of milk produced daily and a ready urban market in nearby Kampala.
The region’s proximity to the capital, coupled with rising demand for processed dairy products such as yoghurt and cheese, presents a compelling investment opportunity for farmers and agro-processors.
For instance, according to district production data, more than 262,000 litres of milk leave Luwero area every day, largely destined for Kampala, while about 130,000 litres are consumed locally. This steady flow underscores the scale of production and the growing potential for value addition within the region.
Nationally, Uganda’s cattle population has also been on the rise, growing from 11.4 million in 2008 to 14.4 million in 2021, representing a 27.2 percent increase. Buganda North alone accounts for about 1.6 million cattle, with Greater Luwero contributing a significant share.
In Nakaseke district, it produces approximately 250,000 litres of milk, much of which is collected and also sold in bulk Kampala. However, household consumption remains high. On average, each household retains about 15 litres of milk daily.
This growing livestock base has positioned the dairy sector as a viable pathway for wealth creation, particularly through value addition. Processed products such as yoghurt offer higher returns, longer shelf life, and access to premium markets compared to raw milk.
In Kikyusa Town Council, Luwero District, Kukundakwe Caleb, the proprietor of Kuku Butikwa Mixed Farm, is one of the farmers sitting on this potential. Producing an average of 70 litres of milk daily and selling each litre at UGX 1,200, he acknowledges that the market for milk is readily available.
“Concentrating on milk production wouldn’t be a bad idea because the market is available and off-takers are in abundance. The challenge is the price. When you compare it with the input costs, it becomes uneconomical,” he explains.
Despite having the capacity to increase production, Kukundakwe has deliberately held back, citing low farm-gate prices as a major disincentive. He notes that output could be significantly improved through better feeding systems such as silage, rather than relying on open grazing under the paddock system.
However, the promise of dairy value addition is being undermined by structural challenges, particularly unreliable electricity supply. Without consistent power, investments in milk processing remain risky or altogether unattainable for many farmers.
Kukundakwe has since opted to invest close to UGX 8 million to extend electricity to his farm, abandoning earlier plans to purchase a generator worth about UGX 100 million from Kenya. Currently, he relies on generators to pump water and process silage, a costly approach that limits expansion.
With only 15 heads of cattle, including three lactating cows, he maintains that dairy farming can be profitable, but only for farmers with the financial capacity to sustain operations and invest in productivity-enhancing technologies.
Milk, Yoghurt prices in the region
Across district, raw milk prices fluctuate between UGX 800 and UGX 1,200 at farm gate, rising slightly to between UGX 1,200 and UGX 1,800 in open markets. Yet these margins remain thin. Dr. Odua Fred, the Luwero District Veterinary Officer, notes that transportation costs alone take up about UGX 200 per litre, leaving farmers with minimal profit.
Milk’s perishable nature further complicates the business, with a shelf life of less than a week even under refrigeration. While it offers quick cash flow, the low returns make it less attractive compared to processed dairy products.
Yoghurt production, on the other hand, presents a more lucrative alternative. The process involves pasteurising fresh milk at 85 degrees Celsius, cooling it to 45 degrees, and introducing bacterial cultures to ferment it. Flavours such as vanilla, strawberry, or chocolate are then added before packaging.
Despite production costs averaging UGX 2,400 per litre, including raw milk, yoghurt sells at about UGX 4,000 per litre, yielding a profit margin of roughly UGX 1,600. This is significantly higher than the estimated UGX 200 profit from selling raw milk.
Experts also emphasize the importance of using pasteurisation over open boiling, as the latter results in evaporation losses of up to 120 millilitres per litre.
To venture into yoghurt production, an entrepreneur may spend a minimum of about UGX 1.5 million, with a processing capacity of 50 liters.
Reflection on Lwangga’s experience
Some entrepreneurs have already begun tapping into this opportunity. Luwagga David Mpagi, proprietor of GMD Mixed Farm Ltd, has shifted his focus entirely to yoghurt production after relocating his other enterprises to Nakasongola District.
Operating from Gayaza Village in Butuntumula Sub-county, he sources milk from Wabigalo and supplies yoghurt to markets in Kampala and Mukono. His decision followed challenges in managing multiple enterprises despite securing a UGX 140 million loan from the Uganda Development Bank in 2023.
Rather than expanding rapidly, Luwagga has chosen to prioritise quality and consistency, producing up to 1,000 litres of yoghurt on weekly basis depending on demand and using solar-powered storage facilities.
“Increasing production means investing in transport and storage, which I’m not ready for yet. I prefer to build a strong customer base first through quality,” he says.
Adherence to standards
He cautions that value addition requires strict adherence to hygiene and safety standards, noting that poor handling can lead to spoilage and loss of market trust within days.
Compliance with regulatory requirements also adds another layer of complexity. Certification by the Uganda National Bureau of Standards requires that all inputs, including packaging materials and ingredients, be sourced from certified suppliers.
Workers must also undergo medical testing, and producers must register with the Uganda Revenue Authority under the Electronic Fiscal Receipting and Invoicing Solution for VAT compliance.
Even with these hurdles, the demand for dairy products continues to grow, reinforcing the sector’s long-term potential. However, without deliberate investments in rural electrification, affordable financing, and farmer capacity building, much of Greater Luwero’s milk will continue to leave the region in raw form denying farmers the higher incomes that come with value addition.
For farmers like Kukundakwe, the opportunity is clear. The challenge lies in turning that potential into a sustainable and profitable reality.
