Kenya’s sugar industry is set for a substantial rebound following the expiration of a four-month ban on sugar milling, according to a recent report by BMI Research. The ban, implemented by the Agriculture and Food Authority (AFA) in July 2023 and lifted in November, was introduced to curb the premature milling of sugarcane, which had become a significant issue due to unfavorable weather conditions over the past three years.
Significant Increase in Sugar Production Expected
With the lifting of the ban, sugar production in Kenya is projected to surge by 37.7% year-on-year, increasing from 530,000 tonnes in the previous year to 730,000 tonnes in the 2024/25 period. This optimistic forecast is detailed in BMI’s “Sugar Production Review 2024,” which examines the effects of the ban lift on the sector.
The ban was initially put in place to address the premature harvesting of sugarcane, a problem that arose due to below-average rainfall between 2020 and 2023, a period marked by the La Niña climate phenomenon. To mitigate this issue, the AFA allowed sugar factories to process cane only if they could prove its maturity. This measure aimed to ensure that only fully grown sugarcane would be milled, thereby improving the quality and quantity of sugar produced.
Rising Demand and Consumption
Despite the production dip caused by the ban, sugar consumption in Kenya is expected to increase by 3.2% year-on-year, from 1.15 million tonnes in 2023/24 to 1.18 million tonnes in 2024/25. This rise in demand is driven by the growing needs of the bakery and hospitality sectors, which are significant consumers of sugar. Additionally, BMI County Risk experts foresee that a lower inflation rate will further support private consumption.
Kenya’s 2023 Economic Survey identified confectioneries and baked goods as the fastest-growing subsectors in the country’s food processing industry. Moreover, the robust performance of the tourism sector, which contributed Sh1 trillion to Kenya’s economy in 2023, is also expected to boost sugar demand. The hospitality industry, which relies heavily on sugar for various services and products, will play a crucial role in this increased consumption.
Addressing the Deficit
Despite the expected increase in production, Kenya’s sugar sector will continue to face a deficit, projected to peak at 658,000 tonnes in 2023/24 before narrowing to 496,000 tonnes in 2024/25. This ongoing shortfall underscores the challenges within the industry, which include low productivity and quality of sugar, inefficient processing, and limited value addition. These issues must be addressed to ensure the sector’s sustainability and to meet the growing domestic demand.
Policy and Industry Challenges
In June 2023, the Ministry of Agriculture and Livestock Development issued a Policy on the Revitalization of the Sugar Industry, acknowledging the persistent issues and reliance on imports. Major challenges highlighted include:
- Low productivity and quality of sugar
- Inefficient processing
- Limited value addition
- Low adoption of technology
Farmers also face significant difficulties, including limited access to credit and low soil fertility due to inefficient farming practices like burning crop waste and monocropping. These challenges reduce the overall yield and quality of sugarcane, affecting the entire supply chain from farming to processing.
Employment and Economic Impact
The sugar sector remains a vital part of Kenya’s economy, employing over 400,000 small-scale farmers who supply 90% of the cane to the country’s 14 sugar factories. It serves as a primary source of livelihood for households in 15 counties across Nyanza, Rift Valley, Western, and Coast regions.
According to the Kenya Association of Manufacturers (KAM) Sugar Sub-Sector Profile 2021, the sector’s contributions are substantial but are hampered by the aforementioned challenges. Addressing these issues through improved practices, better access to credit, and technological adoption is crucial for the sector’s sustainability and growth. Enhanced farming techniques, efficient irrigation systems, and modern processing technologies could significantly boost productivity and profitability for farmers and millers alike.
Steps Towards Improvement
To address these challenges, the government and industry stakeholders must collaborate on several fronts:
- Training and Education: Providing farmers with training on best practices for sugarcane cultivation, including crop rotation, soil health management, and efficient water use.
- Access to Credit: Improving access to affordable credit for small-scale farmers to invest in quality seeds, fertilizers, and modern farming equipment.
- Technological Adoption: Encouraging the adoption of advanced technologies in sugarcane farming and milling to enhance efficiency and output.
- Infrastructure Development: Investing in infrastructure to support the sugar industry, including better roads for transportation of cane and improved irrigation systems.
As the ban on sugar milling expires, the Kenyan sugar industry is set for a resurgence, with significant increases in production anticipated. However, overcoming the sector’s deep-rooted challenges will be essential for sustaining this growth and meeting the rising domestic demand. The government’s policy efforts, alongside industry stakeholders’ initiatives, will play a critical role in revitalizing Kenya’s sugar industry and securing its future. Through strategic investments, technological advancements, and comprehensive support for farmers, Kenya can achieve a more robust and resilient sugar sector that benefits all stakeholders involved.
