Dairy processing company Brookside Limited is laying off 50% of its staff in Uganda, citing low sales due to Kenya's restriction on milk imports.
The development was confirmed in a letter by the company Human Resource manager, Winnie Mugabi, addressed to the Commissioner of Labour at the Ministry of Gender, Labour and Social Development.
The company which is a subsidiary of Brookside Kenya, makes sales through its agents and resellers in the market.
Since 2020, the exports to the Kenyan market have averaged 75% of the total milk volumes processed in the company, with 25% being local sales and exports to other in the region.
However, in March, Kenya Dairy Board, issued an order for indefinite suspension of milk powder imports into the country, a move the Kenyan body said aimed at cushioning the industry from surplus production and low producer prices.
Consequently, the board temporarily suspended the issuance of new milk import permits.
According to Mugabi, the decision to suspend import permits has largely affected its Kenyan market.
"In March 2023, the Kenya government stopped granting export permits to the company thereby denying the company access to 75% of its market," said in the letter.
Mugabi further says that since then, the company has been trying to mitigate the effects of these adverse developments by trying to grow local sales and also source for alternative markets in replacement of the Kenyan blocked market.
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However, she says having worked on these initiatives for the last three months, they have not been able to realise tangible results from the initiatives in the short run, despite having engaged relevant authorities from government.
She says they have been forced to scale down operations across the company entire value chains to sustain the business.
"Therefore, for us to continue running the factory, we have no choice but to scale down all our operations across the entire value chain to match with our current level of business which is paltry 25% of our normal operational volumes," Mugabi said.
She added that in light of the above, over 50% of the company staff will be affected by way of a retrenchment intended to take effect in July.
"The terminal benefits of affected employees shall be paid as per the Employment Act 2006 and will be processed within seven working days upon clearance and termination acknowledgment." Mugabi noted.
The company noted that it shall continue engaging relevant government authorities as well as look for alternative markets for its products and that should the situation improve, they will embark on staff recruitment to fill the void.
