Kenya’s sugar industry is experiencing a notable shift as domestic production surges, resulting in a significant drop in sugar prices. According to the latest report by the Agriculture and Food Authority (AFA), the country’s annual sugar consumption is approximately 1.1 million metric tonnes, with 950,000 metric tonnes allocated for household use. Recent data reveals that domestic production has improved significantly, impacting both market prices and supply dynamics.
In the first quarter of 2024, Kenya’s sugar production reached 485,802 metric tonnes by August, showcasing a robust output that has influenced price trends. However, the report highlights a period of fluctuation in production during April and May due to maintenance closures at key mills. Transmara and Sukari mills were temporarily shut down, while Mumias and West Valley also halted operations for minor repairs. This maintenance period led to a temporary dip in production.
Despite this setback, the industry saw a rebound in June and July, with production figures climbing to 75,500 metric tonnes and 84,500 metric tonnes, respectively. This resurgence can be attributed to the reopening of Transmara and Sukari mills, which significantly contributed to the recovery in production levels.
Among the sugar factories, the West Kenya Sugar factory led with a production capacity of 97,260 metric tonnes. It was followed by Naitiri with 65,420 metric tonnes, Kibos at 57,000 metric tonnes, and Butali with 53,204 metric tonnes. Transmara, while contributing 38,435 metric tonnes, was positioned fifth in terms of production capacity.
Conversely, several mills, including Nzoia Sugar, Chemili, South Nyanza (Sony), Muhoroni, and Mumias, lagged behind with lower production figures. Nzoia produced 11,605 metric tonnes, Chemili 17,575 metric tonnes, South Nyanza 16,610 metric tonnes, Muhoroni 11,984 metric tonnes, and Mumias 24,397 metric tonnes.
The increased domestic production has led to a significant drop in sugar prices. As of recent reports, the price of a 50kg bag of sugar has fallen to Sh5,128, down from Sh9,500 at the same time last year. This decrease in price is largely attributed to the excess in supply, which has surpassed the monthly consumption average of 80,000 metric tonnes by 4,000 metric tonnes.
Moreover, the decline in sugar prices has also influenced cane prices, which have dropped from Sh6,050 per tonne to Sh4,950. Despite the overall decrease, the cane price has stabilized at Sh5,125 per tonne in June and July 2024, consistent with the last review on July 4. However, this drop has raised concerns among cane farmers, who have expressed dissatisfaction with their reduced earnings. AFA has suggested that removing the VAT on transport could potentially improve farmer revenues.
In addition to the drop in domestic sugar prices, sugar imports have also declined. The AFA attributes this to a court case halting imports and the low market prices making imports less attractive. In June 2024, Kenya imported 4,300 metric tonnes of brown sugar from Uganda and COMESA, a decrease from 5,100 metric tonnes in May and significantly down from 22,992 metric tonnes in April. This represents a further decline from the higher import figures seen in earlier months.
Overall, Kenya’s sugar industry is navigating a period of significant change. While the increase in domestic production has led to lower prices and a decrease in imports, it also highlights ongoing challenges within the sector, including the need for improved support for cane farmers and a more balanced approach to managing production and maintenance schedules. As the industry continues to adapt, the effects of these changes will be closely monitored to gauge their long-term impact on both producers and consumers.
As the political landscape in Kenya evolves, Saitabao Ole Kanchory’s endorsement of Wiper Party leader Kalonzo Musyoka as the presidential Read more
The High Court of Kenya has temporarily halted a government directive requiring school-going children to register with the Social Health Read more
President William Ruto called upon newly appointed Inspector General (IG) of Police, Douglas Kanja, to ensure the equal application of Read more
Over 2,000 Njuri Ncheke elders have endorsed Interior and National Administration Cabinet Secretary Kithure Kindiki as their key liaison to Read more
Police officers in Lodwar town seized bhang worth Sh50,000 bundled up as fish, intended for transport to Kitale. The interception Read more
Party leader Raila Odinga has appointed Kisumu Governor Peter Anyang Nyong'o to chair the party’s Central Committee meetings. This move Read more