The Missing Links to Self-Sufficiency in Kenya’s Sugar Sub-Sector
The sugar sub-sector in Kenya provides both forward and backward linkages to the economy by supplying raw materials to manufacturing industries and providing employment opportunities for the locals in sugar zones. The various towns that have sprung up around the sugar factories provide services related or unrelated to cane production.
The sub-sector’s economic role dates to 1902. After independence, the government took central stage in the ownership and management of the sector. The main reason behind the government’s involvement was to ensure sugar self-sufficiency with exportable surplus. Sugar self-sufficiency in this case means the extent to which Kenya can satisfy her sugar needs from her own domestic production. The government’s involvement was also as an import substitution strategy and to provide a viable alternative that would protect the domestic market. The sugar sub-sector was also seen as an important tool for social development and an agent for infrastructural and rural development.
While the intended purpose of involvement by the government has to some extent been achieved, several challenges still ail the sugar industry at the farmer, miller and consumer levels, failure to achieve self-sufficiency with exportable surplus being the most outstanding.
The gap between production and consumption has been widening, with consumption always being higher than production. In the last five decades, production has surpassed consumption only once between 1978 and 1982. In 2017, total land area under cane was 191,215 hectares, up from 80,093 hectares in 1980.
The millers produced an average of 617,065 tonnes of sugar in the last five (5) years, thus leaving an average deficit of 252,916 tonnes per annum. Local consumption has been increasing at an average of 16kg/capita/year and has remained the second highest in East Africa after Sudan, whose consumption per capita stands at 20kg/capita/year. The gap in consumption is met through imports mainly from the COMESA region (45 per cent). By being a COMESA member, Kenya enjoys duty free sugar importation quota of a maximum of 350,000 tonnes annually if imported from other COMESA countries.
AFFA (2018), Sugar production, consumption, imports and exports in tonnes per annum
Low cane productivity is one of the major reasons why the gap between production and consumption is widening. Kenya has sub-optimal production on a hectare piece of land compared to other countries in Sub-Saharan Africa. In the last ten years, Kenya has only managed an average of 66 tonnes/ha compared to South Africa and Sudan with 94 tonnes/ha and 100 tonnes/ha, respectively.
While South Africa and Sudan, for example, have embraced use of genetically-modified cane, which is early maturing and tolerant to climate variations, there is low adoption of higher yielding cane varieties in Kenya, as evidenced from the 2016 cane census, which shows that a cane variety (CO421) introduced to farmers in 1969 is still the most dominant cane variety with a coverage of 41.1 per cent. This is despite continuous research and release of new higher yielding cane varieties by the Sugar Research Institute.
Heavy reliance on rainfall in cane production significantly affects productivity. Most major sugar-producing countries in Africa such as Sudan, Malawi and Mauritius practice irrigation. There is a positive correlation between productivity and rainfall patterns in the last five decades. The annual rainfall recorded in cane growing zones has been below the optimal rainfall requirements of 1500-1700mm annually for cane production. At the same time, Kenya is categorized as a water-scarce country and the frequent droughts are not making the situation any better in terms of cane production. A significant drop in the quantity of cane delivered to factories was recorded from 7.2 million tonnes in 2016 to 4.8 million tonnes in 2017 due to prolonged dry weather conditions.
Kenya’s sugar sub-sector is heavily reliant on small-scale farmers who currently number about 250,000. These farmers produce and supply approximately 92 per cent of the cane processed in the factories. In comparison, the supply of cane to industries by small-scale farmers in South Africa and Mauritius is 10 per cent (25,000 farmers) and 30 per cent (26,000 farmers), respectively.
In Kenya, sugar growing counties/districts such as Kakamega have had the highest population growth rate since the 1960s. While the increased area under cane is an indicator of the crop preference, the unit of land under cane per household has declined due to population pressure. Moreover, sub-division of land to small pieces for inheritance has created diseconomies of scale, leading to high cost of production.
Poor agronomic practices, including application of less than recommended fertilizer quantities and agrochemicals, contribute to low cane yields. Unlike countries such as Sudan and Egypt, the government does not directly finance or support the sugar industry, but rather relies on sugar development levies, which are borne by the farmers. Besides, the current taxation regime where all farm inputs are taxed makes the cost of production relatively high. Currently, the average cost of producing a tonne of sugarcane in Kenya is about US$ 22.5, compared US$ 13 per tonne in the COMESA region.
Other challenges ailing the sugar sub-sector include inadequate extension services. This function is devolved and weaknesses in provision are evident at a time when extension services are no longer supply-driven but demand-driven.
Aspirator countries such as Brazil have challenges more related to complexity of production and harvesting systems rather than cane productivity.
To revamp the sugar sub-sector in Kenya and attain the self-sufficiency status, challenges should be addressed at farmer level. Emphasis should be placed on the adoption of drought-tolerant and early-maturing cane varieties such as the KEN 82-121 released in 2011 by the Sugar Research Institute. This variety matures early (15-17 months), is high yielding (85-125 tonnes/hectare), high in sucrose content (15.9%) and is relatively resistant to smut disease. Farmers should be encouraged to take advantage of government-supported institutions such as the Commodities Funds, which provide input loans at lower interest rates compared to market rates.
To gain economies of scale in sugar production, a policy directive on block farming and zonal limitation of land sub-division is necessary. For this to work, robust out-grower institutional arrangements are needed to cope with free-rider problem that may emanate due to land consolidation.
Authors: Evelyne Njuguna and Dennis Kyalo, Young Professionals, Productive Sector Department