The Treasury has re-opened a window for unlimited duty-free imports of sugar despite the country having amassed sugar stocks to sustain it for the next five months, raising fears of flooding the market with the commodity.
A special gazette notice by Treasury secretary Henry Rotich extended a window of duty-free imports to December 31, 2017.
“Duty shall not be payable on the sugar which will have been loaded onto a vessel between September 1, 2017 and December 31, 2017, destined to a port in Kenya and consigned to a local sugar miller,” the notice reads in part.
Sources say the crop’s regulator was not consulted over the new imports plan that will benefit private millers who have the cash to ship in imports.
On Thursday, Mr Rotich said the importation will be done by sugar millers and not businessmen.
But this arrangement will hurt cash-strapped State-owned millers and Mumias Sugar.
The Sugar Directorate had confirmed that traders and millers imported 300,000 tonnes of the commodity in August alone ahead of the August 31 expiry window of a duty waiver on cheap sugar from Brazil.
The August imports are an equivalent of the country’s six-month sugar demand.
The country consumes about 50,000 tonnes of sugar monthly.
Statistics by the Agriculture and Food Authority (AFA) further showed that total sugar imports between January and July this year amounted to 245,168 tonnes.
This means that between January and August alone, some 545,168 tonnes of the sweetener were shipped into the market — almost equivalent to the average amount of sugar produced in the country annually.
Kenya produces about 600,000 tonnes of sugar a year, compared with annual consumption of 870,000 tonnes.
The sugar deficit is usually covered by stringently controlled imports from the Common Market for Eastern and Southern Africa (Comesa) trade bloc.
The Treasury had scrapped duty on imported sugar from outside Comesa in May following a severe shortage of the commodity in the country that saw a kilo of sugar cross the Sh200 mark.
The increased imports, mainly from Brazil, have helped pull down prices to between Sh100 and Sh110 a kilo.
Although the increased importation may help to further lower consumer prices, it may pose a challenge to local millers who are competing for the same market.
Improved short rains are projected raise sugarcane production in key growing areas and support operations of factories.