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Tanzanian govt invites a kenyan company to invest in tanzania

Discussion in 'Kenyan News and Politics' started by nomasana, Jul 11, 2011.

  1. n

    nomasana JF-Expert Member

    Jul 11, 2011
    Joined: Aug 14, 2009
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    Brookside Dairy has been invited to resume milk processing in Tanzania after pulling out three years ago over a dispute with the government.

    “We have received invitation and communication has started. Of course we shall have our conditions,” said the group general manager David Heath.

    He said one of the conditions would be to be given a freehand to collect milk from all parts of the country.

    “We want a national as opposed to regional approach because milk production in Tanzania is still low and cannot support massive investment like what we have in Kenya,” he said.

    Tanzania banned Brookside, one of the region’s biggest processors, from collecting milk and processing it in Kenya.

    Brookside, however argued that milk production was low to sustain an investment of $100 million (Sh8 billion) in a processing plant.

    The withdrawal affected farmers in northern Tanzania, where Brookside operated, pushing prices of raw milk down from Sh27($0.3) to Sh 9 ($0.1) a litre.

    Tanzania accused Brookside of going against the 2004 agreement that it would rehabilitate the defunct state-owned Tanzania Dairies – on which it spent about Tsh2 billion to revamp – and put up an ultra heat treated milk processing plant.

    At the time of the closure in November 2008, Brookside collected an average of 6,000 litres of milk peaking at 13,500 daily.

    The farmers earned about Sh200,000 ($2,230) daily from sale of the milk. However, this was far below the 60,000 litres required for a UHT facility.

    The amount was an improvement from 1,000 litres that Brookside collected daily in 2004 when it entered the market.

    Other areas affected were Tanga Fresh, which used to supply milk amounting to an average of 30,000 litres a week to Brookside.

    Brookside says it had been building the capacity to increase the quantities of milk before constructing the plant.

    According to Tetra Pak Eastern Africa dairy industry report 2011, Tanzania produces an average of 1.1 billion litres annually, with only 10 per of it processed.

    The country has about 19 million head of cattle, among the highest in Africa out of which 650,000 are dairy cows with 60 per cent of the population concentrated in northern regions of Arusha, Kilimanjaro and Tanga.

    Livestock production in Tanzania accounts for 6.1 per cent of the national wealth. Dairy sector accounts for 30 per cent of livestock production.

    The nascent dairy industry in Tanzania grapples with lack of investors and market for locally processed milk. Investors have to bear with low and unreliable milk supplies.
    Other factors that have hampered faster growth of the industry are high production costs, particularly energy, water and transport.

    The country also has low milk consumption at about 40 litres per person per year compared to 145 litres in Kenya against the 210 litres per year recommended by the World Health Organisation.

    Brookside is making a re-entry in a changed environment with East African Common Market protocol having taken effect in July 2009, partly solving the problems associated with the earlier agreement.

    The protocol has made it much easier for companies to set up in any of the five member states and source raw materials and labour across the borders.
  2. m

    moyo JF-Expert Member

    Jul 12, 2011
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    It's a great move by TZ govt, Brookside will have to focus first on building capacity of local breeders/farmers to enhence milk production.The public should also be encouraged to consume milk,it's healthy for their bodies and economy.
  3. Akwaba

    Akwaba Senior Member

    Jul 14, 2011
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    This is funny. The government realized that they overplayed their hand. The investor said I'm fed up and I am leaving you. Now the government is like Oh, I am sorry please come back. Whenever the government wants to impose a stupid rule, they should probably ask first would the U.S. do this. If the and the country is benefiting maybe take what you can get is the right approach.

    On another note it is interesting gov't rolls over for $100 million from mining companies when they could easily make that in tax revenue from other productive sectors, yet it keeps on discouraging them.
  4. G

    Geza Ulole JF-Expert Member

    Jul 14, 2011
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    where is the source of your article? can you do us a favor telling us where you got that info. before i answer you...