Uganda’s dairy industry, a key sector within the country’s third National Development Plan, has experienced remarkable growth in the last decade, with raw-milk production rising from 1.9 billion litres in 2014 to 2.8 billion litres in 2021, contributing 6.5 percent to agricultural GDP. However, the sector faces challenges including seasonal supply fluctuations, disease outbreaks, limited market diversification, and heavy reliance on Kenya for its dairy exports. In response, Uganda’s Dairy Development Authority (DDA) – supported by FAO’s AgrInvest in Uganda project and FAO’s Monitoring and Analysing Food and Agricultural Policies programme – devised a Dairy Policy Action Plan in 2022 to boost the sector further and address issues through targeted policy interventions.

One area to tackle in the DPAP is to enhance Uganda’s dairy export edge by identifying high-potential dairy products and new or existing markets for them. Current exports are concentrated in four key products – non-concentrated milk, low-fat and high-fat concentrated milk, and milk-derived fats and oils – dominating 90 percent of exports, with high demand from Kenya. But diversification is crucial for long-term resilience and greater growth.

The report looks at the country’s dairy export competitiveness in terms of specialization patterns, export growth, export-relative prices, and where Ugandan dairy firms figure on the competitiveness ladder. It also analyses Uganda’s dairy imports, as well as the characteristics of Ugandan exporting and importing firms, and discusses informal trade in dairy. The report closes with conclusions and policy recommendations to boost dairy exports and thus strengthen the overall dairy sector bringing with it wider socioeconomic benefits for Uganda.