Kenya Gains Extension To Regulate Cheap Sugar Imports

Kenya Gains Extension To Regulate Cheap Sugar Imports

Kenya has managed to secure a two-year extension to regulate cheap sugar imports into the nation, despite the government's protracted efforts to finalize much-needed reforms in the sugar industry.

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The Extension The Common Market for Eastern and Southern Africa (Comesa) Council of Ministers granted Kenya its seventh extension on Thursday during a meeting in Lusaka, Zambia. This extension goes beyond the five-year limit permitted by the Comesa trade rule.

According to a Comesa dispatch, “The Comesa Council of Ministers gathering held in Lusaka, Zambia on the 23rd of Nov.’23 granted Kenya an extension of sugar safeguard measures for two more years to enable the government to conclude the process of transforming the sugar industry and enhance sector competitiveness in readiness for full integration into the Comesa free trade regime.”

Since 2002, Kenya has relied on Comesa's protections against low-cost imports to sustain its troubled domestic sugar industry, where millers—particularly those owned by the State—are having a difficult time making ends meet due to mounting debt.

The nation is now dependent on imports because private companies like West Kenya Sugar Company, Sukari Industries, Kibos Sugar and Allied Industries, and Butali Sugar Company are unable to meet the nation's rising demand for the sweetener. Once thriving and dominant, state-owned sugar millers in western Kenya, such as Chemelil, Sony, Muhoroni, Noia, and Mumias, are in a sorry state due to mounting debt, aging machinery, and a biting shortage of raw materials.

High sugar prices In December 2022, Kenya managed to secure a sixth extension that begins in March and ends this month. The new extension has thus prevented an influx of cheaper sugar into the country, even as consumers grapple with the burden of high sugar prices, which have risen at the fastest rate of any food commodity over the past year.

Kenya was, however, forewarned by Comesa recently that the import restrictions are only a temporary fix because they impede the free flow of commodities throughout the region. Comesa had given Kenya a number of directives to follow in the direction of liberalization. These measures include lowering production costs, sugar factories diversifying into other revenue streams such as ethanol production and cogeneration, changing the payment formula, and increasing production capacity.

Sugarcane production Kenya is permitted to import up to 350,000 tonnes of sugar from the Comesa region to make up for the country's deficit. In an effort to help public sugar companies compete with private millers, the Cabinet last month approved the waiver of Sh117 billion in debt owed by these companies. There is a concentration of commercial sugarcane production in Kenya's Western, Nyanza, Rift Valley, and Coastal regions.

The millers receive sugarcane from more than 300,000 farmers. More than 94% of the supply comes from outside growers, with the remaining 4% coming from the core estates held by the different millers.

According to the Agriculture Ministry, there are 16 sugar mills in the nation with a combined processing capacity of 51,450 tonnes of cane per day; however, capacity utilisation is only around 56%. To avoid crushing prematurely harvested cane, Kenya halted local sugar milling in July. The AFA plan states that crushing is only permitted once the government has located mature cane pockets that are prepared for milling.

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