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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

26 April 2012

USDA GAIN: Kenya Sugar Annual 2012USDA GAIN: Kenya Sugar Annual 2012

Kenya will likely import about 250 thousand tons of refined sugar during calendar year (CY) 2012, when compared with 300 thousand tons imported during CY 2011, in spite of record setting cane and wholesale and retail sugar prices and Government of Kenya (GOK) reported efforts to encourage greater domestic production to meet domestic demand.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed


Kenya’ sugarcane farmers will likely increase production during CY2012 for the reasons noted in the summary through adoption of improved cane varieties and slightly increased area harvested. In addition, sugar refiners have increased crushing capacity through new and renovated facilities.

The GOK and the private sector operate a total of 11 sugar refineries ranging in crushing capacity from about 500-to-9 thousand tons per day (TCD). Total capacity of all 11 mills reaches about 30 thousand TCD and, as such, capable of milling the entire Kenyan area harvested in about 200 days. Some analysts estimate that industry owners will invest on the order of one half Billion Dollars between now and 2014 to build new and refurbish old refineries.


KSB forecasts Kenya per capita sugar consumption will increase. However, the estimate of increase, about four percent, coincides with the annual rate of population growth.

FAS/Nairobi notes that Kenyan middle-class consumers are becoming aware artificial sweeteners. The annual consumption growth rate may be higher than for sugar, but that rates starts from almost no/zero consumption in previous years.

Please note that the KSB-supplied prices here below reflect the precipitous price increase that led to price and physical rationing of sugar from about July of 2011 through today. The GOK allowed few imports during this period of escalating prices, reportedly because of a law suit regarding the legality of importing COMESA sugar.


During CY2012, Kenyan sugar traders will likely import about 250 thousand tons from traditional suppliers, including Egypt, Saudi Arabia and South Africa and export about 20 thousand metric tons during CY2012, the majority to the European Union under the African, Caribbean and Pacific trade preferences act. Remaining exports will go to non-EAC/COMESA borders, principally Sudan.

In 2011, Kenyan sugar traders imported both low and high-polarity sugar and exported low-polarity sugar. Over 80 percent of the low-polarity refined sugar came from Malawi, Madagascar and Egypt; just less than 90 percent of high-polarity sugar originated in Saudi Arabia, South Africa and Egypt; and, exported about 17 thousand tons of low-polarity sugar to the European Union.


During CY2011 the GOK petitioned the COMESA Directorate to extend Kenya’s sugar import safeguards through CY2014. COMESA agreed to the request in October, paving the way for the GOK to retain a COMESA Member import tariff-rate quota of 340,000 tons at zero tariff and ten percent above-quota tariff. Reportedly, the GOK agreed that Kenya will reduce sugar production costs by about 40 percent, approaching the costs in Swaziland, Malawi and Zambia.

Importers of non-COMESA Member country sugar must scale tremendous hurdles to access the Kenyan marketplace. They must pay an ad-valorem tariff of 100 percent, receive permission from the KSB, pay VAT and development levies and submit extensive quarterly and annual records to the KSB.

The GOK, through the Kenyan Ministry of Agriculture (MoA) reportedly plans to privatize five Government-held sugar refineries by 2014. Some reports indicate that three GOK-held refineries have become profitable with aid from record high sugar prices. Nonetheless, the GOK may have to write off some or all of the accumulated massive debts in any deal with sugarcane growers and/or other refiners.

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