In the first quarter of 2024, sugar production in Kenya decreased by 2.83 percent, falling to 193,275 metric tonnes (MT) from 198,895 MT in the same period last year, according to the Kenya National Bureau of Statistics (KNBS).
This decline reflects a broader trend, with total production dropping 40.6 percent from 796,554 MT in 2022 to 472,773 MT in 2023. The reduction was due to a five-month milling ban imposed by the Agriculture and Food Authority (AFA) to allow immature sugarcane to mature.
Despite this, production is expected to recover with increased cane deliveries. The KNBS data indicates that cane delivery in the first quarter rose to 2,304.39 MT, up from 2,170 MT in the same period last year.
This positive trend suggests a potential rebound for the sector, as previous challenges, such as adverse weather conditions, may be stabilizing. The increase in cane deliveries also indicates the potential to surpass last year’s total delivery of 5,483 MT.
As of 2022, sugar cane production in Kenya reached approximately 8.7 million metric tonnes, up from 7.8 million metric tonnes the previous year, marking the highest level in five years. The KNBS report notes that cane deliveries increased by 10.4 percent, rising from 756,000 MT in February 2024 to 834,900 MT in March 2024.
This is occurring as the United States Department of Agriculture (USDA) Foreign Agriculture Service (FAS) forecasts a significant rebound in Kenya’s sugar production for the marketing year 2024/25.
The FAS projects a 40 percent increase in production compared to the previous year, reaching 750,000 metric tonnes (MT). This anticipated growth is attributed to an expansion in the area harvested following the end of a sugarcane harvesting ban imposed by regulators in 2023/24, as well as more efficient sugar extraction from new mills.
Currently, Kenya operates 15 sugar factories with a combined processing capacity of about 44,450 tonnes of cane per day (TCD). Despite these advancements, the country has struggled with self-sufficiency in sugar, as consumption continues to exceed supply.
Annual consumption remains high at approximately 1.14 million metric tonnes (MMT), which includes about 980,000 metric tonnes of mill brown or white sugar and 160,000 metric tonnes of white refined sugar.
In response to the sugar shortfall last year, authorities permitted duty-free imports from outside the Common Market for Eastern and Southern Africa (Comesa) region. Import allocations were progressively increased, starting from 100,000 tonnes in January, rising to 180,000 tonnes in May, 290,000 tonnes in August, and 250,000 tonnes in October.
The National Treasury has extended the duty-free import window until June 30, 2024, allowing for an additional 250,000 tonnes of sugar.
This extension, coupled with a rebound in local production following the end of the milling ban, has helped stabilize sugar prices in Kenya. As a result, prices have decreased to Sh165 per kilogram in March 2024, down from a peak of Sh229 in July 2023.
In 2024, the global sugar market faces both challenges and opportunities that could significantly affect Kenya’s sugar sector. Major sugar producers such as India and Thailand are forecasting declines in production, which could tighten global supply and drive up prices.
India might halt exports completely due to domestic supply issues caused by adverse weather affecting crop yields. Meanwhile, Thailand’s exports are expected to decrease from 7.5 million metric tonnes (MMT) to just four million MMT, further constraining global supply.
However, the outlook is not entirely negative. An influx of raw sugar from Brazil’s 2024/25 crop, anticipated to start in the second quarter of 2024, is expected to ease the supply deficit and stabilize prices by the end of the year.
This could help mitigate the impact of reduced exports from India and Thailand on Kenya’s import costs.
