Kenya to Increase its Annual Sugar Import Limit

Sugarcane

Sugar

Kenya

Other Policies

Demand

Market Intelligence Analytics Team

Published Jul 15, 2022

Despite high domestic demand, Kenya relies heavily on regulated sugar imports to meet its domestic demand. For MY 2022–23, it is anticipated that sugar production will record a YoY fall of 4% due to reduced sugarcane yields. Higher prices of fertilizers have resulted in lower applications and have severely impacted the yield. Consumption is anticipated to be 5% more than the previous year, resulting in higher imports. To meet the increased demand, the country plans to import 500 thousand mt of sugar, up from 375 thousand mt purchased in the previous corresponding period. Kenya is working on improving its sugarcane productivity and the processing capacity of private companies. While these changes will be visible in the long run, the country will rely heavily on imports to meet domestic demand this year.

Kenya has the highest per capita sugar consumption in all of Africa. The country produces over 600 thousand mt of sugar annually, yet there are occasional sugar shortages which results in making sugar imports easier by removing restrictions on import and rising sugar prices in the country. In the upcoming MY 2022-3, Kenya’s sugar production is expected to fall by 4% to 660 thousand mt. The lower production can be attributed to low sugarcane yields caused by limited application of fertilizer, due to higher fertilizer prices. In April 2022, fertilizer prices hovered around USD 53 per 50 kg bag which is a YoY increase of 71% from the previous year’s USD 31 per 50 kg bag. Despite a fall in domestic sugar production, sugar consumption is expected to continue rising and record a YoY increase of 5% to touch 1.15 million mt. The demand for sugar is being driven by consumers returning to the restaurant and hospitality sectors following the lifting of COVID-19 restrictions.

Anticipating a shortage due to limited production, the Sugar Directorate of Kenya's Agriculture and Food Authority has set an annual limit. However, once the limit is reached, the country will not allow any further import permits. To meet the increased demand, the East African country plans to import 500 thousand mt of sugar, up from 375 thousand 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 imported raw and refined sugar would be subject to a 100% tariff from countries other than COMESA. However, imports from COMESA countries can enter Kenya duty-free up to the 350 thousand mt annual safeguard quota. Imports from COMESA countries that exceed this quota are subject to the standard 100% import duty.

Components of Total Sugar Availability in Kenya

Source: USDA

With high demand, Kenya hardly exports any sugar in raw or processed form. The country has been struggling to meet its domestic demand by investing in development of sugarcane plantations and sugar processing mills. Private mills in Kenya are expanding into zones that were previously reserved for state-owned operations and according to the Kenya’s Sugar Research Institute (SRI) this will likely improve Kenya’s sugarcane yields and processing efficiency in the long run. SRI has also reported that new private sector-supported sugarcane plantations produce up to 140 mt per hectare of cane compared to yields of 90 mt per hectare in traditional areas serviced by public mills. The private mills are driven to maximize their profits and adopt better harvesting practices. In the long run, it can be expected that Kenya might become self-sufficient in their sugar production, but for the upcoming year, the country will need to rely on imports to meet its domestic demand.