Kenya's sugar high: Big boom, big profits as sugar industry is revived

The sugar sub-sector in Kenya has, for decades, been synonymous with misery and suffering. Simply put, it has been more bitter than sweet.

Farmers have endured low pricing for their cane, delayed payments, and low production due to a lack of concrete government subsidies, unlike other crop sub-sectors.

Politically, the sugar sector has been a topic of endless promises and commitments to revamp its value chain, but little tangible progress had been achieved. Almost every political competitor in past general elections has included promises to "revive the sugar sector," yet few of these lofty manifestos have borne fruit.

The narrative shifted on January 20, 2025. A historic day in the agriculture calendar of the Kenya. For the first time since sugarcane was introduced in Kenya in 1922, farmers got bonus payments.

Looking at the faces of the 15,846 farmers drawn from Kakamega, Busia, Bungoma and Siaya Counties who received bonuses worth Ksh.150 million in a ceremony witnessed by President William Ruto at the Mumias Sugar Complex Grounds, in Kakamega County, one could clearly tell that despite the obvious joy of bonuses, the farmers were still in shock of the sweetness of the sugar reforms that has taken over 100 years.

 “With a record 832,000 tonnes of sugar produced last year, Kenya is on course to achieving surplus production and commencing regional exports by 2026, turning sugarcane cultivation into a viable and rewarding venture,” President Ruto remarked as he handed cheques to the farmers.

The President assured farmers that reforms in the sugar sector are firmly on track, with the goal of ensuring optimal economic benefits. He highlighted a three-pronged government approach:

“First, we must pay the farmers. Second, we must pay the employees. Third, we must pay their bonuses. Today, I am here to pay farmers a bonus of 150 million shillings. You now have money in your pockets," he said.

The hitherto dysfunctional value chain had made some farmers contemplate shifting to other crops and heightened the clamor for privatization of the sugar factories, a move often exploited by sugar barons aiming to acquire mills at throwaway prices.

It is expected that the signing into law of the Sugar Bill at the tail end of 2024 by the President will make sugarcane farming even sweeter, like its end product, and gradually, farmers will reap maximum benefits from their crop. The endemic problems of delayed payment and poor pricing have been resolved, and now the icing on the cake is a bonus.

 “This is clearly transformational,” said Deputy President Kithure Kindiki. “We are investing in critical value chains: agriculture, livestock, fisheries, the blue economy, and mining, where 85% of Kenyans derive their livelihoods. Additionally, we are improving the infrastructure that supports value chains, such as roads and electricity. Beyond that, we are investing in the social sector through reforms in health under Universal Health Coverage and education. These constitute the “Seven Golden Keys” that will push Kenya from where we are today to the desired position of a first-world nation in the shortest time possible.”

Since taking office in September 2022, President Ruto has rolled out interventions not only in the sugar sub-sector but also in other scheduled crops like tea and coffee. These efforts have contributed to improved household incomes and job creation. Analysts note that the success sugarcane farmers are enjoying is neither accidental nor miraculous. It is the result of carefully formulated reforms and implementation follow-up.

Key reforms include allocating Ksh.600 million in subsidized fertilizers through the Cane Development Fund, boosting production and reducing farming costs. Cane testing units, similar to quality testing systems in the tea and coffee sectors, have incentivized farmers to grow higher-quality cane.

Mechanisms for fair competition have also been implemented, such as a policy where farmers delivering cane to Mumias Sugar Company receive 50% of its annual rent as a bonus based on supply. The modernization of mills has further enhanced efficiency and sustainability.

Additionally, the government’s debt relief of Ksh. 117 billion, which included settling farmer and employee arrears, has restored confidence and productivity in the sector. The reforms have also reduced sugar imports to below 10% of annual demand, with projections indicating a surplus by 2026. This surplus will stabilize foreign exchange and strengthen Kenya’s import cover.