Dar es Salaam. Imported dairy products are gradually losing their dominance on supermarket shelves in Tanzania as local processors expand production, supported by government policy reforms and investment in modern processing technology.
The shift has created new opportunities for dairy farmers and processors. Official figures show milk production has increased by 40 percent over the past six years, although the industry continues to face low productivity, unreliable markets and inadequate milk collection systems.
According to figures presented in Parliament in May 2026 by the Minister for Livestock and Fisheries, Dr Bashiru Ally, national milk production rose from three billion litres in the 2019/20 financial year to 4.2 billion litres in 2025/26.
Processing capacity also grew by 37 percent, increasing from 74.3 million litres in 2019/20 to 101.4 million litres during the first 10 months of the 2025/26 financial year.
Data from the Tanzania Dairy Board (TDB) show the country has 187 dairy processing plants with a combined installed capacity of more than one million litres a day. However, they currently process only about 287,000 litres daily, highlighting the sector's significant underutilisation.
The industry also received a boost in 2018 when the government sharply increased import levies on milk products. Import charges rose from Sh150 to Sh2,000 per kilogramme under the Animal Diseases and Animal Products Movement Control Regulations, making imported dairy products significantly more expensive. The chief executive officer of Tanga Fresh Limited, Mr Musa Kopwe, said the changes had transformed the market.
"Ten years ago, supermarket shelves were dominated by imported milk. Today, locally processed products occupy a much larger share," he said. He said that advances in processing technology have extended the shelf life of locally processed milk to between 90 and 180 days, making it more competitive.
Despite these gains, processors remain constrained by shortages of raw milk. Mr Kopwe said Tanga Fresh has expanded its processing capacity from 40,000 litres to 120,000 litres a day but currently operates at only about 15 percent of capacity because of limited milk supplies.
"Operating at such a low level is expensive because the factory was designed to process 120,000 litres a day," he said. He said greater investment is needed to maintain processing equipment and finance dairy farmers to increase production.
Delayed payments to farmers have also become a challenge.
"We are expected to pay farmers within 15 days. However, electricity costs, taxes and other operating expenses often delay payments, discouraging them from supplying milk consistently," he said.
Another processor, who requested anonymity, said seasonal fluctuations in milk production continue to limit factory utilisation.
Supporting farmers during peak production periods would help stabilise milk supplies throughout the year, he added. Although production has increased, Tanzania's milk consumption remains well below international recommendations.
Industry estimates put annual per capita consumption at between 47 and 49 litres, while government figures show it reached 70.5 litres in 2025/26. Both remain far below the 200 litres per person recommended by the Food and Agriculture Organization (FAO). Farmers also argue that official production figures may underestimate actual output because much of the milk is traded through informal markets.
The chairperson of the Pangani District Smallholder Dairy Farmers Association, Mr John Semnkande, said low prices and delayed payments by some processors force many farmers to sell milk outside the formal cooperative system.
This, he said, undermines the collection of reliable production data and slows the sector's development.
A dairy farmer from Pangani, Mr Kimwinyi Waziri, said declining prices and unreliable markets have prompted some farmers to abandon dairy farming in favour of beef production or other livelihoods, including motorcycle taxi (bodaboda) services. Meanwhile, Ms Selina Michaeli, a dairy farmer from Lushoto, said prolonged drought and limited knowledge of milk preservation have reduced production.
She added that economic hardship has forced many households to sell all the milk they produce instead of retaining some for family consumption. The gap between production and processing illustrates the scale of the industry's challenge.
According to the Ministry of Livestock and Fisheries, low productivity is largely linked to the country's dependence on indigenous cattle breeds. Although Tanzania has more than 39 million cattle, about 90 percent are indigenous breeds with relatively low milk yields.
The Tanzania Dairy Board Registrar, Prof George Msalya, said in March this year in Morogoro that the government is implementing measures to improve production, strengthen milk collection and processing systems, and build capacity across the dairy value chain.
The initiatives include upgrading the national herd with improved dairy breeds and implementing a Sh216 billion livestock vaccination programme running from 2025 to 2030. Milk collection centres have increased from 200 to 269 over the past six years, while tax exemptions on imported milk collection and processing equipment are intended to encourage further investment.
Prof Msalya said the government is also implementing a Sh520 billion, 10-year dairy development programme (2025–2035) to improve productivity and strengthen the sector's resilience to climate change.
The programme includes importing 17,200 improved dairy cattle, constructing 150 milk collection centres, and investing in water infrastructure and pasture development.
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