State bets on local sugar supply as imports dry up

“Strong domestic consumption growth and improved access to the European market under the Everything-But-Arms initiative (EBA) and Economic Partnership Agreements (EPAs) are fostering large investment efforts in the continent,” FAO said.

In the face of such hitches from Comesa, Dr Kiome said the government would be banking on improved local production as rains continue to pound most growing areas of western Kenya. “The rains are going on well and we anticipate this would translate into improved sugar production to supply customers,” he said.

According to the third quota report by Kenya National Bureau of Statistics (KNSB), production of sugar cane increased from 994.7 thousand tonnes in third quarter of 2008 compared to 1,103.5 thousand tonnes during the same quarter of 2009.

Expected to grow

FAO said Kenya output is expected to grow by a margin of four per cent helped by improved weather in the western sugar belt. South Africa, the region’s largest sugar producer, is expected to bring 2.4 million tonnes to the market in 2009/10 helped by improved crop husbandry.

“We are optimistic production will improve and consumer prices will continue coming down,” the PS said.

At the end of the December 2009, FAO predicted that consumers, hard hit by the recent rally in global prices, could be headed for a period of affordable supplies following steady price drop in recent weeks on improved output.

FAO) says the average sugar price has dropped from a 28-year-high of US cents 25.18 per pound (or Sh42,000 per tonne) on August 31 to US cents 22 per pound (Sh36,000 per tonne) at the end of October as supply improves with increased output from Brazil and India.

“While a gradual increase in prices in 2009 was expected, given the tightening of the global market, the speed and magnitude of the run-up showed an overreaction of the market to an expected surge of imports by India and to a poor outlook of crops in Brazil in 2009/10,” said FAO.