Kenyans are set to face an extended period of higher sugar prices due to a combination of factors including a global shortage, decreased imports, and reduced local production, leading to a limited supply. The surge in global sugar prices, reaching an 11-year high, is a result of major producers experiencing lower sugarcane production, which in turn has hindered Kenya’s ability to import additional stocks to alleviate the soaring prices. Currently, a two-kilo packet of sugar costs over Ksh420 ($3).
The decline in sugarcane production in Asia and South America is primarily due to unfavorable weather conditions. India, the world’s second-largest sugar producer, has imposed restrictions on sugar exports to fulfill domestic demand as their sugar-producing regions have been affected by low rainfall.
According to the April 2023 market report by the International Sugar Organization (ISO), the average price index for white sugar was $675.69 (Ksh94,292) per tonne. This represents an increase from $586.92 (Ksh81,904) in March and $560.46 (Ksh78,212) in February, indicating the upward trend in global sugar prices.
The global shortage is evident in the significant drop in sugar imports, with only 14,034 tonnes imported in April, an 85 percent decrease compared to 93,880 tonnes in March. This decrease signifies a tightening supply in the international market.
To mitigate the impact on consumers, the Kenyan government has granted permits to importers to bring in 100,000 tonnes of zero-rated sugar. However, the reduced production by local factories and expensive imports have caused Kenya’s weekly optimal sugar stock to decrease by 80 percent. The Sugar Directorate reports weekly stocks of 4,000 tonnes, far below the required optimum of 20,000 tonnes needed to meet the daily demand.
Due to the scarcity of sugar within the Common Market for Eastern and Southern Africa (Comesa), Kenya is compelled to source the commodity from outside the regional bloc to cushion consumers from the high cost of sweeteners.
As early as January, the Sugar Directorate had warned that Kenya might struggle to secure sufficient sugar stocks on the international market, even with the duty-free imports, due to prevailing high global prices and a shortage of the commodity worldwide.
Since January, the global price of sugar has been steadily increasing, rising from Ksh74,117 ($531) to the current level of Ksh92,400 ($662) per tonne.
In April this year, the total amount of sugarcane milled by all sugar factories dropped to 405,389 tonnes, down from 546,150 tonnes in March and 716,274 tonnes in February 2023. This represents a 36 percent reduction in sugar production during the review period.
Additionally, Brazil, the leading global sugar producer, is facing its own challenges due to inadequate rainfall, resulting in a three percent decrease in its sugar production.