NAIROBI, Kenya – As Kenya grapples with a significant decline in sugar production, the effects of a recent ban on immature sugarcane processing are beginning to unfold.
A report by Fitch Solutions Company BMI and the United States Department of Agriculture (USDA) indicates that the country’s sugar output is projected to drop by 32.9pc in the 2023/24 period, plummeting from 790,000 tonnes in 2022/23 to 530,000 tonnes.
This sharp decrease comes in the wake of the Kenyan Agriculture and Food Authority’s July 2023 directive, which restricted factories from processing sugarcane unless they could prove the maturity of the crop.
The ban was introduced to address the issue of factories running out of mature cane to crush, exacerbated by below-average rainfall conditions linked to a triple-dip La Niña between 2020 and 2023.
This led many mills to resort to immature cane, further straining the already pressured industry.
Consequently, Kenya’s sugar production hit a four-year low, with a staggering 40% decrease in output, causing a ripple effect on the country’s sugar market.
Despite the shortfall in production, domestic demand for sugar is expected to rise. The report forecasts a consumption increase from 1.15 million tonnes in 2023/24 to 1.18 million tonnes in 2024/25, with the shortfall being compensated by a sharp rise in imports.
The total annual sugar requirement in Kenya stands at approximately 1.1 million tonnes, comprising 930,000 tonnes of table sugar and 170,000 tonnes for industrial use.
The sugar industry has the potential to produce over 1.47 million tonnes annually, enough to meet domestic needs and provide a surplus for export to the COMESA region.
However, inefficiencies within the industry have resulted in underutilization of this capacity, with processing facilities operating at only around 56% efficiency.
Looking ahead, the expiration of the ban in November 2023 is expected to bring a significant rebound in production.
The report anticipates a 37.7pc year-on-year increase in sugar output for 2024/25, reaching 730,000 tonnes.
This recovery is likely to be driven by growing demand from the bakery and hospitality sectors, with confectioneries and baked goods identified as key growth areas in Kenya’s food processing industry.
However, the sector still faces challenges. The report highlights Kenya’s reliance on safeguard measures from the Common Market for Eastern and Southern Africa (COMESA) to protect its inefficient sugar sector.
Although the government secured a seventh extension of these measures in November 2023, there is concern that future extensions may not be granted.
Additionally, the large production deficit, expected to peak at 658,000 tonnes before narrowing to 496,000 tonnes in 2024/25, underscores the need for substantial investment and long-term strategies to reduce dependence on imports.
