South Africa

Economic safeguard for Kenya's sugar industry is paying off, says Comesa

JOHANNESBURG - The sugar industry in Kenya has steadily expanded over the years and now has 15 white-sugar mills being opened and several jaggery (course brown sugar) operators in place.

This development has been attributed to the safeguard granted by Comesa (Common Market for Eastern and Southern Africa) since 2002, when the government sought protection from the importation of cheap sugar from the region.

According to the head of the sugar directorate in Kenya’s Ministry of Trade, Rosemary Owino, the area under cane increased by 24% from 159,288 hectares in 2010 to 197,438ha in 2019 in an effort to meet the expanding mill crushing capacities.

The cane yields have been fluctuating for the past 10 years, from a low of 51 tons per hectare in 2012 to a high of 66.41 tons per hectare in 2015.

Owino was speaking during the third meeting of the Comesa subcommittee on the Kenyan sugar safeguard last week.

The committee was established in 2018 as a dedicated forum for the Comesa members to deliberate on matters pertaining to the administration of the sugar safeguard.

“For the period January to June 2020, total sugar production was 298,636 tons compared to 244,826 tons in the same period in 2019, a 22% increase. This is an indication of improvement in the industry performance. To bridge the gap, a total of 237,581 tons of sugar was imported,” Owino said.

Sugar production increased by 22% from 523,652 tons in 2010 to 639,741 tons in 2016. In 2019, production stood at 440,935 tons against consumption of 1,038,717 tons, resulting in a 58% deficit.

According to trade experts, production costs determine whether the sugar industry can compete with duty-free and quota-free imports from the Comesa Free Trade Area.

Owino reported that Kenya’s sugar production costs are about US$700 per metric ton. Government-owned sugar mills have the highest cost of production, thus putting Kenya’s production costs at about 36% higher than import prices from the Comesa exporters.

Comesa’s director of trade Dr Christopher Onyango said it was about time the region began strategising on how to deal with the distorted world market prices given the uncertainties in the global sugar market.

“There is an emerging shift of consumer preferences towards healthier diets, which has boosted consumer spending on healthy food, more so in leading producers in developed economies,” Onyango observed.

“The excess sugar is likely to be dumped into the region and this should worry all of us, given the projected increase on world sugar production in the coming years.”

Onyango said among the strategies to address emerging uncertainties was the adoption of environmentally sustainable production, infrastructure, trade policy, research and development and unlocking the potential for the production of energy.

This was in addition to addressing productivity and diversifying sources and usage of sugar to help improve the position of small-scale sugar cane growers and their dependent communities, which are undervalued by the global sugar market.

The meeting was attended by delegates from sugar exporting member states, namely Burundi, Democratic Republic of Congo, Egypt, eSwatini, Malawi, Mauritius, Rwanda, Uganda, Zambia, Zimbabwe and Kenya, which is implementing the safeguard.

- African News Agency (ANA)

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