Kenya's sugar imports increased by more than 300 per cent in the first nine months of this year, at a time the country's cane production has fallen to its lowest in nine years.
The latest market data from the Sugar Directorate shows that the volume of imported sugar rose to 933,844 tonnes from 219,118 over the corresponding period last year -- a 376 per cent increase.
"The increase in table sugar imports is attributed to an amplified shortfall due to low production in the country and the drought," the directorate said.
According to the latest figures from the Kenya National Bureau of Statistic (KNBS), the country's production has fallen to 2.1 million tonnes over the past six months compared with 3.2 million tonnes over the same period last year. May's production of 231,000 tonnes was the lowest the country has recorded in nine years.
The production woes are further compounded by the July opening of import channels from Brazil that have seen factories stuck with the more costly locally produced sugar.
Data from the Sugar Directorate shows a 50-kilogramme bag of imported sugar is selling at $36.05 while the one produced locally is trading at $38.92.
"As at mid-October, stocks held by millers recorded the highest rise over the past one year. Currently, factories are holding over 8,000 tonnes of the commodity, up from a low of about 2,900 tonnes at the start of the year," the Kenya sugar regulator said.
The directorate's head, Solomon Odera, said that when compared with the Common Market for Eastern and Southern Africa (Comesa), the sugar imported from South America is cheaper.
"Regional sugar is quite expensive at $700 a tonne compared with countries like Brazil whose product costs $400 a tonne," said Mr Odera.
Millers have raised the red flag noting that their local stock has become uncompetitive following the increase in imports, which incidentally they are part of, after they were allowed to ship in the commodity.
In August, the Sugar Directorate issued private millers with permits to import 150,000 tonnes of sugar ahead of the expiry of the Comesa duty-free window.
"The millers have been operating below capacity due to the low cane supply; we allowed them to import sugar to cover the shortfall and remain in business. We estimate the shortage in supply will persist over the next year," said the director-general of the Agriculture and Food Authority Alfred Busolo.
Only 162 distributors and millers were given the green light to import sugar with an allowable maximum of 2,000 tonnes per importer.
In May, Kenya's Treasury scrapped duty on imported sugar from outside Comesa, allowing millers and distributors access to sugar from South America.
In August it extended the waiver by another three months, but limited it to millers only in a bid to tighten the imports on a "need to basis."
"The millers who will import the sugar will be required to brand it with their trade names, with the other rider being a clear indication on the packaging on the country of origin," said Mr Busolo.
Agriculture Cabinet Secretary Willy Bett said the move aimed at tackling the production deficit, which currently averages half a million tonnes.
"We want to see our millers remain in operation. So far key millers like Mumias Sugar Company and Nzoia Sugar have had to temporarily halt operations due to an acute shortage of cane. The importation will give them a lifeline until the cane production stabilises," said Mr Bett.
Kenya is facing a sugar shortage as a result of the long-drawn out drought that has hit parts of the country and the underperformance of the largest sugar miller, Mumias, which is facing a financial meltdown.
According to the Sugar Directorate, the imports amassed by August this year should be enough to last the country till the end of January 2018, as it seeks to stabilise prices at the current $1.06 per kilo from a high of $2.1 in April this year.
Tanzania, Uganda and Rwanda also face deficits as their production fell short of the consumption demands, pushing the price up. Cane prices have almost doubled, from $23.8 per tonne in April 2016 to $44.8 per currently, with production dropping from an average 500,000 tonnes to 410,000 tonnes.
Tanzania, whose factories have a production capacity of 320,000 tonnes, has relied on imports from South Africa and Brazil to meet the annual demand of 420,000 tonnes, through a strict import permit system overseen by President John Magufuli.