Looming Sugar Crisis as Shortage Hit Global Market

Sugar prices may surge further in the coming months due to an acute global shortage, which has seen global prices of the commodity jump further amid high demand.

Sugar Directorate head Willis Audi says the cost of sugar in the global market remains high and this may hinder imports.

“We are not sure if there is that sugar in the market and if it is there, the prices might be higher and this may impact imports,” he said.

The directorate says the tightening supply in the market pushed the price of the commodity from 6,787 shillings in October to 7,149 shillings for a 50-kilo bag in November last year. Imported sugar prices landed in Mombasa at 85,000 shillings a tonne in November compared with 83,000 shillings underlining the impacts of the shortage.

The shortage saw Kenya struggle in meeting its last year’s sugar import quota from the Common Market for Eastern and Southern Africa (Comesa). As of November, the country had only imported 48 percent of the total 180,000 tonnes allocation for the year.

In response to the rising cost of the commodity, the government opened an import window in December that would see traders ship in 100,000 tonnes of sugar outside of the Comesa region to curb the shortage.

Kenya relies on imports to bridge the local sugar deficit. The country imports the commodity mainly from the Comesa region. Initially, Kenya was allowed to import 350,000 tonnes of sugar from Comesa states but the Treasury lowered this to 210,000 in 2021.

This followed complaints from Kenyan millers and farmers that the government allows the importation of more sugar than is required, impacting negatively on the local prices.

The Comesa countries are now selling their produce to other global countries especially the European Union where they are fetching better prices, forcing Kenya to seek other alternatives.

The Treasury waived the duty to allow traders to bring the commodity outside of the regional market as sugar coming in from other parts of the world attracts at least 50 percent duty under the East African Community’s common external tariff.