Kenya is anticipated to experience an increase in sugar imports as the impact of a ban on processing immature sugarcane takes effect, according to new reports. However, this trend is expected to stabilize as local mills ramp up production.
A recent report by Fitch Solutions’ BMI and the United States Department of Agriculture (USDA) forecasts a significant decline in domestic sugar production. Output is projected to fall by 32.9% year-on-year for the 2023/24 period, dropping from 790,000 tonnes in 2022/23 to 530,000 tonnes.
This sharp decline is largely attributed to the Kenyan Agriculture and Food Authority’s ban on harvesting immature sugarcane, which began in July 2023. The ban, aimed at curbing the processing of underdeveloped cane, has been enacted to address the issue of mills depleting their supply due to inadequate rainfall from the recent triple-dip La Niña event.
Despite the production slump, the report predicts an increase in sugar consumption from 1.15 million tonnes in 2023/24 to 1.18 million tonnes in 2024/25. This rise in consumption will likely drive a surge in imports to compensate for the domestic shortfall.
Kenya’s sugar production had already hit a four-year low in 2023, with a 40% reduction attributed to cane shortages, which have driven up sugar prices. The country’s annual sugar demand is estimated at 1.1 million tonnes, comprising 930,000 tonnes for table sugar and 170,000 tonnes for industrial use.
Although Kenya’s sugar industry has the potential to produce over 1.47 million tonnes, current inefficiencies result in only 56% of this capacity being utilized. The Ministry of Agriculture points out that underutilization of processing facilities contributes to the ongoing production shortfall.
Following the end of the sugarcane harvesting ban in November 2023, BMI and USDA project a significant rebound in production for 2024/25, with an expected increase of 37.7% to reach 730,000 tonnes. Consumption is also forecasted to rise by 3.2% year-on-year, reaching 1.23 million tonnes, driven by higher demand in the bakery and hospitality sectors.
The 2023 Economic Survey identifies confectioneries and baked goods as the fastest-growing subsectors in Kenya’s food processing industry, which will further drive sugar demand. Additionally, the growth of Kenya’s tourism sector is expected to contribute to increased sugar consumption.
The report highlights that Kenya’s sugar sector faces a substantial production deficit, expected to peak at 658,000 tonnes before narrowing to 496,000 tonnes in 2024/25. The country’s reliance on safeguard measures from the Common Market for Eastern and Southern Africa (COMESA) is also noted, with the government securing a seventh extension of these measures in November 2023. However, future extensions may not be guaranteed.
Efforts to reduce dependency on sugar imports will require significant investment and long-term commitment to address the sector’s challenges effectively.
