Markets & Finance
Kenya’s Comesa sugar imports quota up for review in JuneTuesday March 31 2015
Kenya’s import quota for sugar from the Common Market for East and Southern Africa (Comesa) will be reviewed in June when a key committee meets to draw a formula based on needs.
The move is meant to curb the abuse of quotas that has created a loophole for unscrupulous traders to dump duty-free sugar in the market, hurting the local industry.
“The technical working committee should be convened not later than June 30, to thoroughly deal with a formula for allocating country-specific quotas,” reads the statement from Comesa council of ministers.
Under the Comesa safeguards, Kenya was allocated 300,000 tonnes of the sweetener from Comesa states annually to bridge the deficit created by insufficient production but the country only consumes a quarter of the given quota.
Since 2002, Kenya has been enjoying the safeguards that restrict entry of cheap sugar in the country to prevent unhealthy competition with local firms as the cost of production in the country remains high at Sh92,345 ($1,000) per tonne compared to other states like Mauritius where the same costs Sh36,938 ($400).
READ: Why Kenya seeks extension of Comesa sugar quotas
A solution is yet to be found on how to lower the local costs of production. The Kenyan sugar sector was recently given a one-year extension of the existing safeguards subject to a review and renewal for another one year. The decision was made by the council of ministers in Addis Ababa, Ethiopia.
READ: Kenya wins one-year extension to Comesa sugar import curbs
The extension will operate on the basis of the terms and conditions that the sugar industry in the country was given in 2007 as a prerequisite for the extension. These included privatisation of state-owned millers, doing research into new early maturing and high sucrose content sugarcane varieties and adopting them, and paying farmers on the basis of sucrose content instead of based on weight.
In making the decision, the council said Kenya had made some progress in meeting the conditions saying the Parliament had approved privatisation of the five public sugar companies. However, it is not known when the actual privatisation will take place, having been postponed several times.
Flooding of cheap sugar in the market has often subjected millers to losses as their commodity cannot compete with the imported one, forcing them to lower the cost for them to make sales.