1. Agriculture World

Kenya to Increase Sugar Imports to Meet Local Demand

The Sugar Directorate of Kenya's Agriculture and Food Authority set an annual limit of 180,000 MT for raw sugar imports from all countries in 2022. The issuance of import permits enforces this ceiling.

Shivam Dwivedi
Sugar
Sugar

Sugar production in Kenya is expected to fall by 4% to 660,000 MT in MY 2022/23, owing to lower sugarcane yields caused by higher fertilizer prices, which are expected to limit fertiliser application. Despite an increase in harvested area, which is expected to increase by 3% from 209,000 to 215,000 hectares due to new plantations in Transnzoia sand Narok counties, production will fall.

Sugar has become a more appealing option than maize for many farmers in these areas due to lower labour requirements and guaranteed farmgate prices and sales through mill contracts.

According to a GAIN report, USAID notes that private mills, which account for nearly 80% of total sugar production in the country, are expanding into zones previously reserved for state-owned operations.

In the long run, this will almost certainly increase Kenya's sugarcane yields and processing efficiency. According to Kenya's Sugar Research Institute (SRI), new private-sector-supported sugarcane plantations can produce up to 140 MT/HA of cane, compared to 90 MT/HA in traditional areas served by public mills.

This yield disparity is largely due to better harvesting practices and lower transportation losses in farms contracted with private sector mills.

In addition, private sector mills tend to provide more robust extension services than public sector mills. Furthermore, they convert sugarcane to sugar more efficiently, averaging a cane-to-sugar ratio of 10:1 versus 18:1 in public mills.

Despite a drop in domestic sugar production, consumption is expected to rise 5% to 1.15 million MT as consumers return to the restaurant and hospitality sectors following the lifting of COVID-19 restrictions.

To meet the increased demand, the East African country plans to import 500,000 MT of sugar, up from 375,000 MT purchased in the previous corresponding period. With the exception of Saudi Arabia, the majority of Kenya's imports come from countries in the Common Market for Eastern and Southern Africa (COMESA).

The Sugar Directorate of Kenya's Agriculture and Food Authority set an annual limit of 180,000 MT for raw sugar imports from all countries in 2022. The issuance of import permits enforces this ceiling. Once the limit is reached, no further import permits are issued under this policy.

Imported raw and refined sugar is subject to a 100 percent tariff. Raw and refined sugar from COMESA countries, on the other hand, can enter Kenya duty-free up to a 350,000 MT annual safeguard quota. Imports from COMESA countries that exceed this quota are subject to the standard 100% import duty.

Furthermore, Kenya allows refined sugar from any source to enter at a 10% tariff discount if it is used in domestic manufacturing of goods for export. While Kenya does not export much sugar, this policy encourages the export of goods that contain sugar as a raw ingredient.

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