As we know, Sugar is a vital commodity that plays a significant role in global trade. For many countries, including Kenya, the sugar industry is a crucial sector that supports economic growth and provides employment opportunities. However, recent export restrictions imposed by India, one of the world's largest sugar producers, have had a severe impact on Kenya's sugar industry. In this blog, we will explore the reasons behind India's export restrictions, their consequences for Kenya, and potential solutions to mitigate the effects.
After India placed export limitations on the sweetener, Kenya is now heavily reliant on pricey sugar imports from Uganda, which are expected to sustain higher consumer costs.
According to data from the Sugar Directorate, 68 percent of Kenya's imports of 21,887 metric tons of table sugar in May came from Uganda, while shipments from India, which had been the dominant supplier the month before, fell to 24 percent.
Compared to India, where sugar costs Sh66, 324 per tonne, Ugandan sugar was 43 percent more expensive at Sh117, 848 per tonne. India, the second-largest producer in the world after Brazil, has capped exports of the sweetener at six million metric tons after production fell as a result of insufficient rainfall.
According to a report by the Sugar Directorate, the majority of milled white or brown sugar was purchased in May 2023 from Uganda (68 percent), India (24 percent), Zambia (9%), and less than 1% from Germany.
Due to a shortfall brought on by dwindling cane supply on Kenyan farms, the price of a two-kg package of sugar has remained above Sh420, up from an average of Sh280 in March.
Following a shortfall in the Common Market for Eastern and Southern Africa (Comesa) market, where they obtain the product duty-free, East African countries have been dependent on imports from the global market to meet their sugar needs.
At least 80% of the total sugar imports in February came from Madagascar and India, with the Asian nation providing more than 70% of the cargoes, as per the Kenya Export Import Data.
India has expressed concern that the weather patterns it is seeing may result in less rainfall and less productivity, which may affect the local food supply for its citizens.
Kenya has been severely impacted by its massive annual deficit, which forces the nation to rely on imports from Uganda or the Comesa region to supply domestic demand. The nation is permitted to import from the trading bloc up to 300,000 metric tons per year.
The Sugar Directorate, Kenya's regulatory body for sugar, reported that the total amount of sugarcane milled by all factories fell to 405,389 metric tons in April from 546,150 metric tonnes in March and 716,274 metric tonnes in February 2023, a 36 percent decrease in production throughout the study period.
To combat the anticipated shortfall that has driven up the price of the sweetener, the Kenyan government announced a duty-free import window in December that would allow traders to ship in 100,000 metric tonnes of sugar from outside the Comesa region. The nation is permitted to import from the trading bloc up to 300,000 metric tonnes per year.
The Sugar Directorate, Kenya's regulatory body for sugar, reported that the total amount of sugarcane milled by all factories fell to 405,389 metric tonnes in April from 546,150 metric tonnes in March and 716,274 metric tonnes in February 2023, a 36 percent decrease in production throughout the study period.
The Sugar Directorate claimed that despite the Treasury giving a duty waiver, the volumes sent in have not reduced the price because they are arriving at excessive prices and a weak Kenyan shilling.
Due to the global shortage and tightening market, only a pitiful 14,034 metric tonnes of sugar were imported in April, down from 93,880 metric tonnes (approx 80%) in March, as per the Kenya Import Data
India's sugar export restrictions have had a significant impact on Kenya, affecting the country's sugar prices, the local sugar industry, and the overall economy. To mitigate these effects, Kenya needs to explore the diversification of sugar imports, focus on improving local production, engage in diplomatic discussions with India, and diversify its economy. By implementing these strategies, Kenya can reduce its reliance on a single source of sugar imports. However, if you need any type of assistance regarding Kenya Trade Data, connect to our website, KenyaTradeData.com, to learn more about the latest and most updated market insights. Book a free live demo today!
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