Kenya’s Sugar Market Opens Up: Prices Plunge as COMESA Protection Ends

The Kenyan sugar market is undergoing a seismic shift, driven by the abrupt end of more than two decades of import safeguards under the Common Market for Eastern and Southern Africa (COMESA). In February, retail sugar prices experienced their sharpest monthly fall in nearly two years, marking a new era for both consumers and producers. Official data from the Kenya National Bureau of Statistics (KNBS) reveal an average sugar price drop of 4.37% to Sh166.56 per kilogramme, from Sh174.17 in January—the steepest decline since April 2024.

This drop is the culmination of a series of reductions traced back to late 2023, taking retail prices to their lowest in nearly eleven months. The immediate effect: Kenyan households, long burdened by high food prices, are finding some respite. But the structural implications for domestic producers, especially state-owned mills struggling with high costs, debt and outdated equipment, signal tough times ahead unless urgent reforms are enacted. In this report, we dissect the root causes, analyze the market trends, and detail what lies ahead for Kenya’s sugar sector as it faces open competition for the first time in a generation.

📈 Prices

Region/Exchange	Latest Price	Weekly Change	Market Sentiment
Kenya (Retail)	Sh166.56/kg	-4.37%	Bearish
ICE No. 11 (May 26)	13.72 US-cent/lb	-0.07%	Stable/Soft
ICE No. 11 (Jul 26)	13.79 US-cent/lb	0.00%	Stable
ICE No. 11 (Oct 26)	14.16 US-cent/lb	+0.14%	Recovering

🌍 Supply & Demand Drivers

• Market Liberalization: Kenya’s exit from COMESA sugar safeguards in January 2024 has opened the market to cheaper imports, increasing competition and supply.
• Domestic Sector Struggles: Local sugar mills face high costs, ageing equipment, and inconsistent cane supply, resulting in expensive domestic sugar unable to compete with imports.
• Consumer Impact: Downward price pressure offers relief to households but intensifies pressure on uncompetitive local producers.
• Import Volumes: Under the previous regime, imports were capped at 350,000 tonnes/year. With the cap lifted, regional flows are expected to rise sharply.

📊 Fundamentals

• Structural Weaknesses: Publicly owned mills are burdened with debt and inefficiency, and sector productivity is low compared to regional peers.
• Policy Reforms: The government has written off debts and promoted modernization, but significant challenges remain.
• Economic Outlook: Short-term relief for consumers, but risk of mill closures and farmer distress if reforms lag behind market opening.

☀️ Weather Outlook

• Kenya (Western Growing Zones): Seasonal rains remain adequate for cane growth, but localized drought risks persist. Adequate moisture may support future yields, but operational inefficiencies limit benefits from favorable weather.
• Regional Context: Neighboring COMESA producers (e.g., Uganda, Zambia) have also reported stable weather, ensuring continued competitive supply.

🌏 Global Production & Stock Comparison

Country/Region	2023/24 Production (est. million tonnes)	2023/24 Ending Stocks (est. million tonnes)	Notes
Kenya	0.6	Low	Recovery hampered by sector reform needs & costs
COMESA Region	>15.0	Ample	Major exporters include Uganda, Zambia
Brazil	40+	High	World’s largest producer and exporter
India	30+	High	Key global player, but with fluctuating export policies

📌 Trading Outlook & Recommendations

• For Importers: Anticipate continued access to competitively priced regional sugar; increased volumes may pressure global suppliers active in East Africa.
• For Kenyan Mills: Immediate focus must be on cost-cutting, productivity improvement, and supply chain modernisation. Lobby for targeted transitional support.
• For Regional Exporters: Position to capitalize on Kenya’s now-accessible market. Monitor for any resurgence of protectionist measures.
• For Consumers: Expect continued price relief in the short term; long-term trends depend on pace of domestic sector adaptation.

📆 3-Day Regional Price Forecast

Exchange/Market	Forecast Range (3 days)	Direction
Kenya (Retail)	Sh164–168/kg	Slightly lower/stable
ICE No. 11 (May 26)	13.65–13.75 US-cent/lb	Sideways/Soft