Brookside Limited, Uganda's leading dairy processor, has laid off half of its staff following restrictions on export opportunities to Kenya.
The processor, whose parent company is Kenya's Brookside Dairy, said the failure of the Kenyan government to grant export permits for its products had denied it more than 75 per cent of its market.
The company says blockades imposed by the Kenya Dairy Board have made it difficult for it to continue to supply Kenya, a major market for its products, at optimum levels.
In a letter to the Commissioner of Labour in Uganda's Ministry of Gender, Labour and Social Development, Brookside regretted the decision to retrench staff, adding that it was a painful but necessary decision to enable it to continue operating its factory in Kampala.
Brookside Limited's spokesperson in Nairobi, Wilson Okong'o, confirmed the development in a statement on Saturday.
“Yes, unfortunately, we have had to make structural adjustments which affect our staff, as we had no choice other than scaling down our operations across the entire value chain to match our current business level, which now stands at a paltry 25 per cent of our normal operations in Uganda,” Mr Okong’o said.
Earlier, Winnie Mirembe Mugabi, Brookside Uganda's Human Resources and Administration Manager, said in a letter to the country's Ministry of Labour that the drop in the value of the firm's exports to Kenya had adversely affected the company's business.
“Having worked on these initiatives (to have the Kenya export market fully opened) for the last three months, it is apparent we are unlikely to realise tangible results from the initiatives in the short run. We have also engaged relevant authorities in Government to intervene but without success,” the letter by the company partly reads.
“Under section 81 of the Employment Act, we would like to take this opportunity to inform you of our decision to lawfully terminate employees whose number exceeds 10 for structural reasons. 50 per cent of our staff will regrettably be affected by way of retrenchment, intended to take place in July 2023,” Ms Mugabi said in the letter.
In March, the Kenya Dairy Board (KDB) stopped issuing permits for Ugandan dairy products in the Ken Trade system, despite a notice banning dairy imports issued by the same regulator having been rescinded by the Principal Secretary for Livestock Development.
Last month, dairy processors in Uganda were said to be holding more than 24 million litres of milk as a result of the import blockade imposed by the KDB.
According to media reports in Uganda, the processors, who included Brookside said the impasse had impacted farm gate prices of milk on the back of heavy rains in the neighbouring country, which had led to a rise in milk volumes.
Uganda’s industry regulator, the Dairy Development Authority (DDA) says Kenyan authorities are limiting the number of export permits for milk from the country.
DDA executive director Samson Akankiza said Nairobi is only issuing about 20 per cent of entry papers to exporters of its powdered milk.
Earlier, there were reports in the industry circles that Kenya was committed to resolving the matter of denial of milk export permits for Uganda and that the blockade will be “amicably addressed in the next few days.”
