In Summary
  • Up to six million Kenyans draw a livelihood from Kenyan sugar.
  • Farmers still use low-yield seeds, meaning that Kenya produces far less sugar per hectare than any competitor.

Kenya’s sugar industry has many natural advantages, almost all of which have been undermined by policy and public mismanagement that has seen its productivity slump. As a result, when import protection ends, supposedly next year, the industry will be immediately undercut by far cheaper imported sugar with huge costs to the country.

A quarter of a million farmers grow sugarcane. Up to six million Kenyans draw a livelihood from Kenyan sugar.

IMPORT COSTS

The nation saves Sh40-55 billion a year in import costs by using locally produced sugar — which matters more as our trade deficit continues to grow and place downward pressure on the value of the shilling.

Yet, in its bid to remedy the decline in the industry, the government has drawn up regulations that appear unjustified and inexplicable.

The Common Market for Eastern and Southern Africa (Comesa) has warned that there will be no further extensions in protecting domestic sugar production from imports, yet Kenyan sugar costs $870 (Sh87,000) a tonne to produce compared to $350 in Malawi and $400 in Egypt. There is, therefore, no possibility of Kenyan sugar competing against imports without the cost of production falling dramatically. That makes it a top priority for the new regulations to reduce production costs.

LOW YIELD SEEDS

Yet, the proposed controls comprise a peculiarly old-fashioned model of expensive (for taxpayers) state intervention that will further load costs and actively prevent the key corrections that can reduce our production costs.

The starting point for Kenya’s excessive costs is seeds. Farmers still use old-fashioned, low-yield seeds, meaning that Kenya produces far less sugar per hectare than any competitor.

A clear jump-start would have come from regulations that encouraged entrepreneurs to produce any of the 14 new high-yield seeds developed by the Sugar Research Institute (SRI) and already released for commercial production. Likewise, delivering on the Crops Act’s commitment to extension services to get farmers switch to better seeds would even double yields.

Page 1 of 2