KNBS: Kenya produces more sugar, but consumers still pay higher prices

Despite Kenya producing more sugar than ever before, consumers continue to pay higher prices for the commodity. In July, the average retail price of sugar reached Ksh167.41 per kilogramme, marking the fourth consecutive month of increase. This price hike occurred even though domestic sugar production surged by 35.2% to 437,852 tonnes between January and June, setting a record for the highest first-half production on record.

Similarly, cane deliveries to factories jumped 36.2% to 4.93 million tonnes, indicating a robust recovery in raw material supplies.

However, the surge in domestic production has not translated into lower prices for consumers. Instead, the average sugar prices have fluctuated over the past year, rising from Ksh166.56 per kilogramme in February 2026 to reach Ksh167.41 per kilogramme in July. This suggests that while the supply of sugar has increased, other factors in the supply chain, such as milling costs, taxes, distribution, and retail margins, are playing a significant role in maintaining high retail prices.

The issue of inefficiency in Kenya's sugar industry is not new. State-owned sugar mills have long been plagued by high operating costs, outdated equipment, and financial distress. The government has provided financial support through debt write-offs, but these measures have not addressed the underlying issues of efficiency and competitiveness.

In 2025, the Kenyan government leased several sugar factories to private operators to modernize equipment and improve management, hoping that these reforms would boost the industry's competitiveness. However, the success of these reforms will depend on more detailed indicators such as cane crushed, sugar recovery rates, factory downtime, operating costs, and the ex-factory price of sugar.

Furthermore, Kenya's decision to exit the Comesa sugar import safeguard regime in January 2026, after 24 years, has resulted in the removal of up to 350,000 tonnes of annual imports. The government has since increased excise duty on imported sugar to Ksh40 per kilogramme, signaling a more protectionist stance towards local producers.

While this move provides greater protection for domestic producers, it also underscores the need for efficiency improvements within local factories, as consumers will have fewer alternatives if domestic production costs remain high.

The World Bank–Competition Authority report highlights the tension between protecting domestic production and maintaining competitive pressure. Government support may shield inefficient state-owned factories from market forces, while simultaneously limiting the growth of more efficient private operators. Therefore, the question remains whether the increase in sugar production will lead to genuinely affordable prices for Kenyan consumers or if high costs at various stages in the supply chain will continue to drive up retail prices.