Francis Maingi, the proprietor of a small supermarket in Busia town, has observed a peculiar phenomenon among his customers, primarily sugar producers. They approach the sugar shelves with reverence, carefully reading the prices, pausing, and then leaving without making a purchase.

Busia, a small town on the Kenya-Uganda border, is at the epicenter of the current sugar crisis. The price of the sweetener in Busia and across Kenya has reached an all-time high, with a 2kg packet is retailing between Kes450 and Kes500 in various parts of the country, up from Kes300 one year ago.

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Scarcity of sugar yet factories remain shut

For many residents of Busia, who cultivate sugarcane, the scarcity of sugar amid the vast acres of unharvested cane from frustrated farmers, as sugar factories shut down due to cane shortages, is a misnomer. The county, home to several sugar factories, including Busia Sugar Industries at Busibwabu and the West Kenya factory at Olepito, and bordering Mumias Sugar, has witnessed the industry's collapse due to intense cane poaching and imports across the border. The worsening cases of smuggling of the sweetener over the years have further impacted their fortunes.

Now, the county residents, particularly the rural poor, can no longer afford sugar, causing real distress. Sugar is not just a luxury on their breakfast table but a crucial ingredient in distilling the local brew, chang'aa, which, despite being declared illegal, sustains a significant number of households in the area. The proprietor of Frankmatt supermarket mentions that, although he sells a two-kilo pack at Kes480, many buyers cannot afford it. According to statistics, Busia County has a poverty index of 83 percent.

“As much as we don’t make a lot of profit from sugar sales, consumers are finding it tough to afford sugar with the current prices. The majority will walk to the sugar shelves, look at the prices, then walk away, indicating that they are unable to afford it,” he said.

Even Ugandans are looking for cheap sugar

Being a border town, scarcity in Busia often prompts consumers to seek alternatives in neighboring Uganda. There, consumers may find lower prices, influenced by different state policies and production stability.

However, the current sugar crisis is a global issue. Sugar prices are at an 11-year high due to reduced sugarcane production in Asia and South America. This is partly a result of adverse weather conditions in South America, while India has limited exports to meet local demand.

Consequently, even in Uganda, sugar prices are exorbitant. Presently, a 50kg bag of sugar is priced at Kes12,000, whereas the same quantity in Kenya is sold at a wholesale price of Kes10,500.

Read also: Sugar factory shutdowns sour western economy’s prospects

Importing duty-free

To address the crisis, President William Ruto has turned to duty-free sugar. Kenya's reliance on duty-free sugar has become an almost annual ritual as the government seeks to fill the deficit.

Last year, despite the sugar sub-sector growing by 13.8 percent to 796.6 thousand tonnes compared to a 16 percent growth in 2021, Kenya imported 320,000 tonnes of sugar. In 2022, Kenya nearly doubled production from 491.1 thousand tonnes in 2018, according to the Economic Survey 2023.

In less than a year, Kenya has waived duties on sugar imports twice. Towards the end of last year, the government issued import licenses for 100,000 metric tonnes. In July, the government granted a special license to select individuals to import 100,200 tonnes of sugar from non-COMESA countries. The first consignment is expected to arrive in the country in a few weeks to address the sugar deficit. Dr. Ruto stated that Kenya is experiencing a shortage of sugar due to a scarcity of cane.

As Kenya prepares to increase sugar imports to stabilize prices, the country is also contending with a local crisis: cane poaching. Across the sugar belt, unscrupulous private millers often buy sugarcane from farmers without investing in its production. This practice takes a significant toll on factories that provide farm inputs to the affected farmers.

As of today, both public and private sugar factories have ceased operations for four months. This has left farmers frustrated, local economies in decline, and consumers unable to afford sugar. According to Mr. Lambert Ogochi, the director of Busia Outgrowers’ Company, the closure will devastate the sugar sector, as only a few individuals in the country benefit from the importation.

Not enough cane for factories

Mr. Ogochi, who is also the national coordinator of the Smallholders’ Sugarcane Farmers Association, stated that the announcement does not bode well for cane farmers. He argues that the western region has sufficient cane to sustain the sugar mills throughout the year.

“The announcement made by President William Ruto to allow the importation of sugar to address the current sugar shortage will have a negative impact on the sector. The region has enough cane to keep our factories running. Last month, the Sugar and Food Authority permitted the closure of all sugar mills in Kenya for three months to allow the cane in farms to mature before they resume operations, and that does not imply opening the door for sugar importation,” said Mr. Ogochi.

Farmers' groups assert that the decision to permit sugar imports could be exploited by unscrupulous traders to import sugar that could remain in the markets for up to five years, essentially strangling the sector.

According to cane farmer Malala Anyangu, the imports will make it challenging to sell his cane and eventually lead to a reduction in sugar prices. Mr. Malala has been in the cane farming business for the last 10 years. He notes that the pricing of cane was doing well, but with importation, it will lower the prices.

“The decision by President William Ruto to allow the importation of sugar from non-COMESA countries is working to our disadvantage. As farmers, where will we take our cane once the imported sugar floods the country?”

Read also: Sugar Barons Dancing on Mumias Graveyard

Kenya a haven of barons, brokers, and smugglers

The farmers accuse some government officials of frustrating efforts to revive the sector for personal gain. Over the years, Kenya’s sugar industry has spawned brokers, barons, and smugglers who exploit the disorganization in the industry, securing lucrative deals at the expense of both farmers and consumers.

Kenya has implemented protective restrictions on sugar imports. Unfortunately, these checks have resulted in the product being more expensive in the country compared to its neighbors. Statistics indicate that Kenya’s sugar production costs exceed $600 (Kes65,000) per metric tonne, twice that of other Common Market for Eastern and Southern Africa (Comesa) countries. This essentially makes Kenya an attractive export market regionally.

However, Kenya limits duty-free imports from Comesa countries to a maximum of 350,000 metric tonnes annually. Maintaining this quota typically restricts imports and keeps prices high.

Stalled privatization of sugar millers

Since 2002, Kenya has aimed to safeguard the local sugar industry, insisting on the need to privatize local millers. Policymakers in successive governments assert their intention to ensure the sustainability of the local industry before opening the market.

However, for over one-and-a-half decades, Kenya has been unsuccessful in privatizing the five ailing sugar millers. The process is frequently hindered by court cases, vested interests, and the legacy debt of the mills.

The late Henry Obwocha, a former Minister and West Mugirango MP who served as the chairman of the privatization commission, mentioned that MPs from the sugar belt are concerned that community land will fall into private hands.

At the heart of the dispute is the 41,411.47 acres of land, equivalent to 31,372 football fields. Many factories currently own extensive portions of these lands, with Chemelil having 6,868 acres, Nzoia 11,438 acres, South Nyanza 7,407 acres, Muhoroni 6,866 acres, and Miwani 8,831 acres.

Currently, Dr. Ruto’s government aims to shift from privatization to leasing, but industry analysts view this as another tactic to prolong the ongoing challenges while adversely affecting consumers.

While attributing the crisis to chaos within the sugar sector and competition from local millers, the President announced that he has a lasting plan to address the challenges facing the sector.

Abuse of sugar imports window

However, the President assured sugar industry players that his government will ensure that cartels don't abuse the importation window.

“Privatization is the best solution; the issues that stalled this process can be handled. We saw it happen during KTDA (Kenya Tea Development Agency), so they can be sold competitively to farmers,” said Kwame Owino, the CEO of the Institute of Economic Affairs.

According to Mr. Owino, state officials, millers, and politicians all have reasons to be nervous about the competition. He adds that they benefit more by keeping the millers on their deathbeds while importing cheap sugar and selling it expensively locally.

Simon Wesechere, the Deputy Secretary-General of the Federation of Sugarcane Farmers, said the process of reviving the sugar industry has been  studied, reported on and task-forced on several occasions. He suggests that the new government needs only to look at its ministry recommendations if they are serious about reforms.

"We reject the Cabinet decision and invite it for public meetings for a reminder of the real revival plans. This one of theirs is all but a mirage," he said.

The reality is that sugarcane production is a highly expensive undertaking. From land preparation, planting, crop husbandry, harvesting, and transportation to the millers, farmers incur significant costs.

Cane development crisis

 

The reality is that sugarcane production is a highly expensive undertaking. From land preparation, planting, crop husbandry, harvesting, and transportation to the millers, farmers incur significant costs. The growers' investment in the sector is also wasted as greed and poaching take center stage.

 

After legislators quashed the sugar development levy, sugar development programs in Kenya stagnated. Subsequently, poaching, a practice where private factories purchase sugarcane from farmers without investing in its production, means that state companies that invested in production lose their money. They are left struggling to obtain cane to crush, leading to the collapse of the only institutions that supported farmers.

 

This has deterred investments in inputs and cultivation, ultimately affecting production and leaving an entire industry struggling to find cane to crush. According to Mr. Geoffrey Wandera, cane farmers from Matayos are urging the government to sensitize farmers to engage in cane farming. He notes that this move will enable growers to produce enough cane to sustain sugar mills in Kenya.

 

“Unless we start sensitizing members of the public about the need to embrace cane farming to provide the raw material for local factories, sugar importation will persist for a long time,” he noted.

 

Three years ago, Busia Sugar Industries resorted to importing cane from Uganda after realizing that the cane produced by Kenyan farmers was insufficient to run their factory. However, the government banned the importation, plunging them into a crisis.

 

The Federation of Sugarcane Farmers states that public sugar mills can only be stabilized through serious cane development programs. "While solutions to the problems affecting the subsector are outlined in various reports, such as the sugar industry task force, the government is employing firefighting tactics that cannot address the industry's woes," he said.

 

Instead of opening the market selectively to only a few players, the government has created an avenue for smuggling and contraband sugar, most of which the state has admitted is dangerous.

 

In a new draft policy already cleared by the Cabinet, dubbed "Seeking to Revitalise the Sugar Industry," the government concedes that lax enforcement of standards, porous borders, and fragmented regulatory oversight have all contributed to creating an environment where substandard sugar enters the Kenyan market.

 

If you walk into any of the supermarkets in Western Kenya, where the majority of cane farmers live, you will not find sugar packaged from local companies. Sugar branded as Kabras sugar, Ndhiwa, Mumias, and Nzoia packages are not on the shelves. The sugar available for sale is packaged by private brands.

 

Time to end the pretense

 

For consumers, the state and interested parties are playing games with sugar, the source of their livelihoods. All that consumers are asking for is an affordable sweetener. Mr. Owino says the reality is that 14 million Kenyan households are subsidizing just about 80,000 households that produce the crop, which is not sustainable, especially since sugar constitutes a significant factor in Kenya’s household spending.

 

“If we stop the subsidies, the truth is that farmers will easily move on to something else. Kenyans are spending a disproportionate share of their incomes on food, and all we want is affordable food,” Mr. Owino said.

 

His sentiments were echoed by consumers like Mr. John Okoth of Busia County. According to John, this is the first time in his life he is buying a kilo of sugar for over Kes480. If the President’s move will reduce sugar prices in Kenya, he welcomes it, but if it will benefit just a few, then it should be condemned.

 

“Sugar is now a luxury in our homes. Families are unable to afford even half a kilogram of sugar. If the move will reduce prices in Kenya, let it happen. But if the president is giving room for a few to benefit from the importation, then that is wrong,” said Mr. Okoth.

 

“What we want as Kenyans is for the government to find a way to reduce sugar prices. Whether to increase cane production or importation of sugar, that is not our problem. Our concern is for the price to reduce,” he added.

 

Ms. Gladys Mutanda runs a restaurant in Busia town and welcomed the idea of importing sugar, saying that the current sugar prices are affecting her business. She is buying a 50kg bag of sugar at Kes10,500, yet earlier this year, the same was trading at Kes6,000.

 

“I am in support of the importation of sugar in the country. I hope it will help in reducing the prices of sugar. Currently, we are buying 50kgs of sugar at Kes10,500 from Kes6,000 last year. As business people, we pass the burden to our customers. A cup of tea early this year was selling at sh20, but now it is going at Kes30. Our clients bear the burden,” she explained.

 

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