The State has raised the buying price of sugarcane by Sh300 to Sh5,300 a tonne, handing farmers a boost in earnings after successive price chops last year due to a production glut raised disquiet and threats of a supply boycott.
In a letter to millers, Agriculture PS Kipronoh Ronoh said higher price came into effect from February 10.
The review is the first done by the fourth interim sugarcane pricing committee, which was appointed by Agriculture CS on January 9, 2025 and held its first meeting on February 7.
The pricing committee is an autonomous unit that draws membership from the Agriculture and Food Authority (AFA), the Ministry of Agriculture, farmers, millers and sugar-producing counties. Its primary mandate is setting and reviewing sugarcane prices.
Millers, who have in the past opposed sugarcane price increases, terming them unsustainable, said through their association that they are on board with the latest price adjustment.
“Our millers who represent us on the committee took care of our interest in the pricing decision. Our members will do all they can to accommodate the new price, noting that there has also been an increase in the price of sugar in the market,” said Stephen Ligawa, chief executive officer of Kenya Sugar Manufacturers Association (Kesma).
The pricing of cane delivered to millers became a hot potato last year after the committee made a series of price cuts to reflect increased supply to millers.
Sugarcane growing areas saw increased output last year after favourable weather in the country from October 2023, and the State-backed fertiliser subsidy, which helped raise productivity.
Latest official data from the Kenya National Bureau of Statistics (KNBS) shows that total sugar production by local millers jumped by 79 per cent to 758,302 tonnes in the 11 months to November 2024, from 423,896 tonnes in the corresponding period in 2023. Sugarcane deliveries to the millers in the period rose by 78.4 per cent to 8.69 million tonnes, from 4.87 million tonnes the previous year.
With the higher sugarcane production, the pricing committee cut the price per tonne of cane from Sh6,100 in February 2024 to Sh5,900 in March, before making another cut to Sh5,100 in April, prompting legal action by farmer associations.
The committee made a further cut in the cane price to Sh4,950 in August, but after a boycott threat by farmers, the government revised the price to Sh5,000, which remained in place until this month’s revision to Sh5,300 per tonne.
The higher price, while welcome for farmers, however signals higher shelf prices for consumers of sugar as millers are likely to pass on the added input cost to buyers.
Consumers are already paying more for sugar from February 1, 2025 following the introduction by the government of the Sugar Development Levy (SDL) on both domestic and imported sugar, charged at four percent of the value of the commodity.
The Tax Laws Amendment Act, 2024 also raised excise duty on imported sugar to 7.5 percent up from five percent.
The changes are set to increase the retail price of the commodity, which over the previous 12 months came down due to the higher local production.
Data from KNBS shows that a kilogramme of sugar was retailing at an average price of Sh161.34 last month, down from Sh209.55 per kilogramme in January 2024.
