Kenya secures more time to control cheap sugar imports

Kenya has secured a two-year extension to control imports of cheap sugar into the country even as the government drags its feet in concluding much-needed reforms in the sugar sector.

In a sitting held on Thursday in Lusaka, Zambia, the Common Market for Eastern and Southern Africa (Comesa) Council of Ministers gave Kenya another extension – the seventh - against an allowable limit of five years under the Comesa trade rule.

“The Comesa Council of Ministers meeting held in Lusaka Zambia on the 23rd of November 2023 granted Kenya an extension of the sugar safeguard measures for two years to enable the government to conclude the process of transforming the sugar industry and enhance sector competitiveness in readiness for full integration into Comesa free trade regime,” said a dispatch from Comesa.

Kenya has been relying on the safeguards from Comesa against cheap imports since 2002 as a means to protect its struggling local sugar industry where millers, especially State-owned factories, are struggling under the weight of debt.

Once vibrant and dominant State-owned sugar millers in western Kenya including Chemelil, Sony, Muhoroni, Nzoia, and Mumias are in a sorry state amid pilling debt, ageing machinery, and biting shortage of raw materials — a situation that has left the country reliant on imports because the private players such as West Kenya Sugar Company, Sukari Industries, Kibos Sugar and Allied Industries and Butali Sugar Company, cannot cope with the rising national demand of the sweetener.

High sugar prices

Kenya secured a sixth extension in December 2022, which runs from March and expires this month.

The fresh extension has thus averted an influx of cheaper sugar into the country, even as consumers struggle under the weight of high sugar prices, which have risen at the fastest rate of any food commodity over the past year.

But Comesa recently warned Kenya that the import controls are a temporary measure because they limit free trade of the commodity in the region.

“Let’s not forget that safeguard measures are meant to be temporary exceptions, in order to minimise the resulting distortion to free trade and regional integration, hence provisions on implementation timeframes and rules of application should be duly respected,” said Egypt’s Dr Mohamed Kadah, who is serving as Comesa’s assistant Secretary-General in charge of programmes, in September.

Comesa had issued a raft of measures to Kenya on the road to liberalisation.

These measures include lowering the cost of production, sugar factories diversifying into other revenue streams such as the production of ethanol and cogeneration, changing of payment formula, and increasing production capacity.

Sugarcane production

Kenya is allowed to import up to 350,000 tonnes of sugar from the Comesa region to bridge the local deficit. As part of sugar reforms, the Cabinet last month approved waiver of Sh117 billion debt owed by public sugar firms to give them a clean slate in a bid to compete with private millers.

Commercial sugarcane production in Kenya is concentrated in the Western, Nyanza, Rift Valley, and Coastal regions.

Over 300,000 farmers supply sugarcane to the millers. Over 94 per cent of the supply is by out-growers the difference being provided by the nucleus estates owned by the various millers.

There are 16 sugar mills in the country with a total processing capacity of 51,450 tonnes of cane per day but the capacity utilisation is about 56 per cent, according to the Agriculture Ministry.

Kenya in July suspended local sugar milling to prevent crushing of immature cane. According to AFA plan, crushing is allowed only when the government has identified pockets of mature cane which is ready for milling.

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