Kenya to Import 250,000 tons of Refined Sugar in 2012

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Kenya to Import 250,000 tons of Refined Sugar in 2012

27 April 2012

KENYA - Kenya will likely import about 250,000 tons of refined sugar during calendar year (CY) 2012, when compared with 300,000 tons imported during CY 2011, in spite of record setting cane, wholesale and retail sugar prices and the Government's reported efforts to encourage greater domestic production to meet domestic demand.

The Government asked and received permission from the Common Market for Eastern and Southern Africa (COMESA) for a market-access safeguards extension until March 2014.

The extension, granted in October 2011 effectively bars open competition between Kenyan and COMESA sugar producers and, as such, was a clear victory for domestic sugar producing interests, including Government-owned interests, who claim to need additional protection while they restructure and upgrade operations.

For CY 2012, cane wholesale and retail prices remain historically elevated, which will likely lead to additional sugar production, even though most analysts don’t expect the record-high price levels reached during CY2011 to persist through CY2012.

During the later part of CY2011, wholesalers and retailers rationed sugar both by prices (double those of CY2010) and through physical rationing. The consuming public, from the rich to the poorest-of-the poor, felt the relatively high prices and shortages.

However, the public disappointment with the high prices did not rise to the level that consumers effectively demanded action from the GOK. The GOK could certainly have short-circuited high prices by seeking an abatement of the 100 per cent ad-valorem tariff or by opening the market to greater COMESA market participation. Nonetheless, vested domestic sugar-industry interests appear to have prevailed and consumers clearly paid the resulting hefty price increases .