Kenya gets 2-year extension of Comesa sugar imports cushion

Sugar at Carrefour Mega on Uhuru Highway, Nairobi. PHOTO | DENNIS ONSONGO | NMG

By GERALD ANDAE
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Summary

• The arrangement limiting imports was due to expire at the end of next February.
• Kenya is struggling to improve output due to relatively high production costs and loss-making sugar factories, which produce  below the annual consumption.

Common Market for Eastern and Southern Africa (Comesa) has granted Kenya a fresh two-year extension of sugar import limits from the regional trade bloc to revamp its ailing industry.

The arrangement limiting imports was due to expire at the end of next February. However, Kenya requested a two-year extension, saying increased imports could smother its sugar business, which is not competitive and has several loss-making millers struggling to stay afloat.

“In its decision, the council urged Kenya to give priority to Comesa-originating sugar, noting that the region produces enough to meet the deficit. The country will be allowed flexibility on the sugar safeguard allocated quota implementation during importation from Comesa member states,” the bloc said in a statement.

Kenya is struggling to improve output due to relatively high production costs and loss-making sugar factories, which produce 600,000 metric tonnes of sugar a year, below the annual consumption of 800,000 tonnes. The deficit is covered through strict import quotas from Comesa.

Sugar production in the nine months to September hit a four-year high, lifted by improved sugar cane supply and improved efficiency in private millers.

Latest Kenya National Bureau of Statistics (KNBS) data shows that 459,972 metric tonnes of sugar were produced between January and September — the highest performance over a similar period since 2016 when output was registered at 493,516 metric tonnes.

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Sugar millers produced 336,114 metric tonnes of sugar in the first three quarters of 2019, meaning that the output of sweetener has grown by 37 per cent this year compared to a similar period of last year.

The improved sugar output is due to good rains in most sugar cane growing areas, especially in western Kenya, which has boosted cane supplies to millers.

KNBS data shows that 5.18 million metric tonnes of sugar cane were produced in the first nine months compared to the 3.4 million tonnes last year.

A recent Sugar Directorate report showed that sugar has steadily improved this year on higher factory efficiency, especially the private millers.