Economy

Sugar imports drop 71 percent on production

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A farmer transports sugarcane in Kisumu County. FILE PHOTO | NMG

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Summary

  • The volume of the sweetener imported in 2018 declined to 284,169 from 989,619 tonnes in the previous year when acute shortage compelled the State to remove import duty.
  • Excess sugar attracts import duty at the rate of 25 percent if obtained from 19-member Comesa bloc and 100 percent if it comes from outside.

Sugar imports dropped by 71 per cent last year compared to 2017, official data indicates, highlighting impact of customs taxes and improved production.

Data from the Sugar Directorate indicate that the volume of the sweetener imported in 2018 declined to 284,169 from 989,619 tonnes in the previous year when acute shortage compelled the State to remove import duty.

Excess sugar attracts import duty at the rate of 25 percent if obtained from 19-member Comesa bloc and 100 percent if it comes from outside.

“Sugar production between January and December last year was 491,097 tonnes compared with 376,111 that was produced in the previous year,” says the report. Improved production implies that the sector is recovering from the severity of drought that the industry suffered the previous year.

According to the report, in the period under review, most sugar factories, with an exception of Muhoroni, Mumias, Nzoia and Kwale, recorded high volumes of production.

In May 2017, the country opened a duty-free window for imports to bridge local deficit, a move that saw the market flooded with cheap sweetener.

But even with improved production, consumer sugar prices have remained high in retail shops despite sufficient supply and a decline in factory prices since September last year.

A spot check by the Business Daily showed most retail shops are selling different brands of a two-kilogramme pack at between Sh230 and Sh240, which implies the falling factory prices have not reflected on the shelves.

Sugar is one of the items in the food basket used in calculating the cost of living levels. High cost of food raises inflation as it accounts for 36 per cent of the total goods used in calculating cost of living.

Normally, Kenya is allowed to import 350,000 tonnes of sugar annually from Comesa to bridge the annual deficit.

The country imported more than 950,000 tonnes of sugar between May and December last year, flooding the market with cheap commodity from Brazil, a move that hit local millers but impacted positively on consumers.