Agent fees push up milk prices

Dar es Salaam. Milk prices have jumped up by between Sh100 and Sh2000 per litre on account of fees charged by agents and pressure on supply of the commodity.

A market survey indicated that the prices have steadily risen in recent months across board, except in Zanzibar where the main supplier, Azam has not raised its retail price.

Tanga Fresh, Azam Milk, KCC and First Choice are all available at the market for higher prices reflecting continued pressure on the consumer.

The prices have been on the upswing since October last year when the government imposed new fees on imported milk to protect local manufacturers.

Yesterday, some manufactures attributed the hiking of prices to increased operational costs as they expand their agent network.

The producers are also unable to meet the demand in the market, as plans are underway to establish linkages with farmers to boost supply.

The government last week also announced a raft of measures, including scrapping off 10 levies associated with milk supply in an attempt to hasten farmer development.

Our survey showed a one-litre of Tanga Fresh was costing between Sh4,000 and Sh4,800 from Sh3, 500. One litre of Azam milk has jumped from Sh300 to Sh4,000 and Sh4,800.

Imported brands, KCC from Kenya and First Choice of South Africa were selling for up to Sh7, 000 a litre compared to the previous Sh5, 000.

“Our previous price of Sh3,500 per litre was a market entry strategy and during that time we were supplying the product to our customers on our own. But we now use agents who have to be paid for,” noted Tanga Fresh general manager Michael Karata. Karata said their recommended retail price is Sh4,000 per litre.

“Some are selling the same up to Sh4,800 because it was hard to control the free market.”

Last October the government introduced new regulation under which milk import fees jumped 13-fold to spur local production. Tanzania is estimated to spend Sh40 billion each year on imports of dairy products.

New fees on importers is Sh2, 000, a litre compared to the previous Sh150. As it stands, Tanga Fresh said the increase in import duty has had some positive outcomes on their operations.

Mr Karata said their production flew to an average of 57,000 litres a day in November to January compared to the previous 40,000 litres. In mid of February, however, it went down to around 50,000 litres due to unfavorable climate.

He added that for imported milk, the price hike was attributable to the increase in import fees, which affected the supply side.

Azam Dairy Products said extra costs in shipping their product from Zanzibar affected margins on the mainland.

In Zanzibar, the price is constant at Sh3, 500 a litre.

Livestock and Fisheries minister Luhaga Mpina was in February quoted by local media as saying countrywide, production capacity stood at 150,000 litres a day against the installed capacity of 750,000