12 November 2018

Kenya's Sugar Import Rises but Production Increases Too

Kenya has reverted to importing sugar from the Common Market for Eastern and Southern Africa (Comesa) and East African Community member countries, bringing in more than 70 per cent of the imported produce from these markets in the nine months to September this year.

The country imported more than 135,000 tonnes of sugar from Comesa and the EAC, out of the 189,000 tonnes it imported in the nine months to September, a significant reduction from the 933,000 tonnes of sugar it imported last year, of which only 300,000 tonnes was from Community countries.

"Within the nine months to September, Comesa-FTA countries supplied Kenya with 84,127 tonnes, while 5,000 tonnes came from Comesa Non-FTA. The EAC provided 51,285 tonnes, with the majority being from Uganda, whereas imports from the rest of the world were 49,208 tonnes," the latest report from the Sugar Directorate shows.

There was also a slight rise in sugar exports in the nine months of this year to 1,947 tonnes against 363 tonnes in the same period last year.

"The low exports are attributed to the fact that Kenya is a deficit sugar producer with most of the production being targeted at local consumers.

Moreover, Kenyan sugar is expensive and therefore not attractive for export," the report says.

Last year, the country's sugar imports increased by 196 per cent compared with the previous year as traders rushed to ship in duty-free sugar to bridge a local deficit.

The significant increase in table sugar imports was due to huge importation of duty-free sugar between May and August 2017 to mitigate the prevailing local shortage in the country.

High imports were registered from non-Comesa countries during the period as more than three quarters of the consignment was imported from Brazil.

On production, the country has also seen a significant improvement, with the tonnage rising by 43 per cent to 362,018 tonnes, a testament to the recovery from the severity of the drought suffered by the country's growers in 2017.

Sobering

However, the report is sobering; it shows that billionaire Jaswant Rai, through his three sugar millers Olepito, West Kenya and Sukari Industries, now controls over a third of the sugar produced locally.

It is also bad news for farmers as his factories processed a lot of imported sugar, with South Nyanza-based Sukari raising its production by 120 per cent to 44,067 tonnes from 19,420 tonnes in the same period last year.

West Kenya saw its production increase by almost 50 per cent to 78,740 tonnes compared with 53,770 tonnes in the same period last year, while the one-year old Olepito managed 3,858 tonnes in production.

"Furthermore, in the nine month period, all the sugar factories, with the exception of Muhoroni Sugar Company recorded improved sugar production as compared with the same period last year, January-September 2017.

"The production was further boosted by operationalisation of Olepito Sugar Company and inclusion of processed bulk sugar imports at West Kenya and Sukari mills," the report says.

In the six months to June this year, the country's sugar production has been declining, attributed to a number of factors cutting across the entire sugar sector.

The downward trend reversed from a low of 28,320 tonnes in June to close the period at the end of September with an improved sugar production of 36,502 tonnes.

"However, most sugar factories are grappling with limited supplies of cane, which has led to the mills operating below 50 per cent of their installed crushing capacity," the Sugar Directorate says.

The dramatic downturn in Mumias output in 2018 season has led to a very low sugar production of merely 4,768 metric tonnes in the period under review, putting the company's fortunes at the lowest in history.

Kenya has also seen an increase in sugar sales in the nine months to September, to 343,643 tonnes compared with 250,274 tonnes sold in the same period last year, an increase of 37 per cent, attributed to improved production and rising local sugar demand.

"The total sugar closing stock held by all the sugar factories at the end of September was 15,762 tonnes against 5,224 tonnes observed over the same period last year.

"During the period under review, Kwale International and Butali Sugar Companies accounted for the largest chunk of the closing stock, at 37 per cent and 14 per cent of the total sugar closing stock respectively," the regulator says in its latest report.

Kenya

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