Kenya's 2012 sugar production is forecast to rise 13 percent to a potential record high buoyed by expected good weather and bigger factory crushing capacity, the industry regulator said. The east African nation of 39 million people has an annual sugar deficit of around 200,000 tonnes, which is usually filled by imports from other producers in the region.
Kenya is struggling to boost output due to relatively high production costs and poorly funded sugar factories. The Kenya Sugar Board (KSB) said Kenya would produce about 552,000 tonnes of sugar, up from last year's 487,022 tonnes, also due to better crop husbandry.
In its record year in 2009, Kenya produced 548,207 tonnes of sugar thanks largely to better weather. The regulator projects demand for the sweetener would grow to 794,844 tonnes this year from 776,000 tonnes last year. "The projection is made against a backdrop of increased crushing capacity in the sugar industry despite the challenges of cane shortage experienced in 2011," Rosemary Mkok, managing director of KSB said in emailed response to Reuters. "With anticipated good rains and increased cane development, we expect 2012 to be a better year for cane production."
Kenya plans to privatise five sugar factories to cut inefficiency and boost competitiveness ahead of the end of trade safeguards in March 2012, which limit imports from the Common Market for Eastern and Southern Africa (COMESA) trade bloc. Kenya currently has an installed factory crushing capacity of 30,109 tonnes of cane per day, but expects an additional 3,000 tonnes to be added when a factory being constructed near the port city of Mombasa commences operations in April 2013.
Experts blame high costs of production for making the Kenyan sugar industry uncompetitive. The regulator estimated the cost of producing a tonne of sugar at about $570 in western Kenya compared with $240-$290 in rival producers such as Egypt.
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