Over the past weeks, sugar prices in Kenya’s retail markets have skyrocketed, putting a strain on many households’ budgets. The average cost of a kilogram (kg) of sugar has surged from Kshs 210 in July to Kshs 250, while a 2kg pack has risen from Kshs 420 to Kshs 500 in most retail outlets. This surge in prices comes at a time when several milling firms in the country have shut down due to a cane shortage, leading to a window of opportunity for licensed importers and unscrupulous merchants to capitalize on abnormal profits.
The increase in retail prices follows a directive from the Food and Agriculture Authority, prompting Western Kenya’s millers to shut down operations after they were found to be processing premature cane. Only millers within the Southern Sugar Belt are currently operational, while those in the Western Sugar belt are expected to remain closed until September 2023 to allow for cane to mature.
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Kenya’s sugar industry faces significant challenges as the nation’s demand for sugar stands at 1.01 million metric tonnes, while local production reaches only 490,704 metric tonnes, resulting in an annual deficit of 521,695 metric tonnes. With a milling capacity of 14.96 million metric tonnes, the current production level of 4.75 million metric tonnes covers only 48.0% of the capacity, leaving a substantial gap that needs to be filled.
The sugar sector plays a crucial role in supporting millions of Kenyans and 400,000 small-scale farmers who supply over 90.0% of the cane required by the milling plants. However, with the current cane shortage and reduced production, the industry is struggling to meet the country’s sugar needs.
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In December 2022, a 50kg bag of sugar fetched a wholesale price of Kshs 6,844, translating to Kshs 137 per kg at wholesale rates and Kshs 155 per kg at retail rates. By May 2023, the price had surged to Kshs 9,252 per 50kg bag at wholesale rates, with retail prices reaching Kshs 211 per kg.
As the sugar crisis continues, many households are facing financial burdens, and with further tax obligations looming due to the Finance Act 2023, the situation may worsen. The government and industry stakeholders must work together to address the cane shortage and stabilize sugar prices, ensuring that the sweetener remains affordable for all Kenyan consumers.
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