One-year extension to regional sugar import curbs
27 February 2014, 19:06
Nairobi - The country has been granted a one-year extension to limits on sugar imports from regional trade bloc COMESA to enable the country to complete reforms that will make its sugar industry competitive, a official said on Thursday.
East Africa's largest economy had been expected to open up fully its market to imports from the Common Market for Eastern and Southern Africa (COMESA) states after more than a decade of being allowed to protect its sugar farmers with high tariffs.
Industry regulator Kenya Sugar Board (KSB) estimates the cost of producing a tonne of sugar at about $570 in western Kenya. The cost is $240 to $290 in producers such as Egypt.
"Kenya was successfully granted a one-year extension on sugar import safeguards by COMESA," Karanja Kibicho, principal secretary at the Foreign Ministry, said after a COMESA meeting in the Democratic Republic of Congo this week.
The tariffs were scheduled to fall to zero in March, but Kenya sought an extension until 2015, giving more time for it to improve infrastructure and carry out other reforms.
COMESA also voiced concerns about European Union plans to abolish an internal sugar quota in September 2017, saying it would hurt COMESA exporting states, Congolese Foreign Minister Raymond Tshibanda said. It called for a delay until September 2020 and requested help to modernise the industry in COMESA.
Kenya's raw sugar production is expected to climb 17 percent to 700,000 tonnes in 2014, buoyed by higher cane supplies and more factory capacity. It has an annual sugar deficit of around 200,000 tonnes, usually filled by regional producers.
"A year is short in terms of effecting comprehensive reforms but it is better than nothing," Peter Kebati, chief executive of the country's largest miller Mumias Sugar said, adding that roads and energy supplies had to be improved.
"We also need to address illegal consignments of sugar that come into the country from outside the COMESA bloc and give incentives to those who have already diversified to other competitive products other than sugar," he said.
Kenya plans to privatise five sugar factories to reduce inefficiency before the end of the COMESA trade safeguards.
KSB said Kenya produced a record 600,179 tonnes of sugar in 2013, up from a revised 502,563 tonnes the previous year.
Kenya has an installed factory capacity of 30,109 tonnes of cane per day and expects 3,000 tonnes to be added when a plant under construction near the port city of Mombasa starts operations. The factory - Kwale International Sugar Company - is 25 percent owned by Mauritius' Omnicane.