Kenya's Sugar Output Hits Record Levels But Prices Remain High for Consumers

Kenya has achieved its highest sugar production in recent years, with domestic output rising 35.2% to 437,852 tonnes in the first half of 2026, according to the Kenya National Bureau of Statistics (KNBS). Cane deliveries to factories also increased by 36.2%, signaling a recovery in raw material supply after a steep decline the previous year.

However, these gains have not translated into lower prices for consumers. Retail sugar prices have risen for four consecutive months, reaching an average of Ksh167.41 per kilogramme in July 2026, up from Ksh164.35 in April. This increase persists despite the surge in production and cane supply.

High Production Costs and Market Structure

The discrepancy between rising output and retail prices is attributed to the high cost of sugar production in Kenya. A joint report by the World Bank Group and the Competition Authority of Kenya highlighted that producing sugar locally remains significantly more expensive than importing it. The report noted that ex-factory sugar prices increased by over 40% annually in 2022 and 2023, outpacing the rise in cane prices and diverging from global trends.

State-owned sugar mills have long struggled with outdated equipment, costly operations, and financial challenges, prompting substantial government debt write-offs totaling nearly Ksh180 billion in recent years. While these measures alleviated financial strain, they did not resolve the underlying inefficiencies that keep production costs high.

Government Reforms and Protection Measures

To improve competitiveness, the government leased four major sugar factories—Nzoia, Chemelil, Sony, and Muhoroni—to private operators under 30-year agreements in May 2025. These leases aim to modernize equipment, attract investment, and reduce operational costs.

On the policy front, Kenya exited the COMESA sugar import safeguard regime in January 2026, ending a 24-year system that allowed imports while protecting local producers. Subsequently, excise duty on imported sugar was raised from Ksh7.50 to Ksh40 per kilogramme under the Finance Act 2026. Agriculture Cabinet Secretary Mutahi Kagwe has also directed the Kenya Sugar Board to halt new sugar import licenses, citing sufficient domestic production.

Challenges Ahead

While these reforms provide stronger protection for local producers, they also increase the urgency for improving factory efficiency. Without lowering production costs, Kenyan consumers may continue to face high prices despite increased output. The World Bank–Competition Authority report warns that protecting inefficient state mills could hinder the growth of more efficient private operators and reduce competitive pressure.

Ultimately, the success of Kenya’s sugar sector reforms will depend on whether mills can convert higher supply into cost-effective production, resulting in more affordable sugar for households. The current data shows progress in production but underscores the need for sustained improvements in efficiency to benefit consumers.