The government has ordered a three-month suspension of sugar milling operations across Kenya’s Upper and Lower Western regions, citing a severe shortage of mature sugarcane. The directive, which takes effect on July 11, 2025, targets five major sugar processors and marks a significant policy shift aimed at revitalizing the struggling sugar industry.
The affected mills include Nzoia Sugar Company, Butali Sugar Mills, West Kenya SugarCompany (including its Olepito and Naitiri subsidiaries), Mumias Sugar (2021) Ltd, and Busia SugarIndustry Ltd, according to a statement from the Kenya Sugar Board (KSB).
KSB CEO Jude Chesire said the decision was reached following a stakeholder consultative meeting held in Kisumu on July 4. “This suspension will allow sugarcane to mature and enable a reset in cane supply planning,” Chesire noted. “A cane census will be conducted within two months to assess field readiness and inform future planning.”
The shortage, blamed on poor cane development strategies and premature harvesting, has led to a steep decline in sugar output during the first half of 2025. The board has now instructed millers to prioritize and intensify cane development activities to ensure a sustainable future supply of raw material.
The shutdown coincides with the implementation of the Sugar Development Levy (SDL), which came into effect on July 1, 2025. The new policy imposes a 4% levy on the ex-factory price of locally produced sugar and the CIF (Cost, Insurance, and Freight) value of imported sugar.
“This is the moment to reclaim the future of Kenya’s sugar industry,” said Chesire, adding that lessons from past failures must guide the sector’s transformation.
The Kenya Revenue Authority (KRA) has been designated as the official levy collection agent, with payments due by the 10th of each month following production or importation.
Sugar Development Fund Revamped
In a further effort to streamline the sector, the National Treasury has approved the transfer of the Sugar Development Fund from the Commodity Fund to the Kenya Sugar Board. The move is expected to improve transparency, enhance credit discipline, and ensure better sectoral reinvestment.
The KSB projects annual SDL collections to exceed KSh 5 billion, with allocations structured as follows:
- 40% (KSh 2 billion) – Cane development programs
- 15% (KSh 600 million) – Road rehabilitation in sugar zones
- 12% (KSh 1.2 billion) – Split equally for cane research and factory modernization
- 5% – Farmer institution strengthening
- 10% – Administrative functions under KSB
The government’s coordinated response, blending short-term shutdowns with long-term financing and oversight reforms, is seen as a bold attempt to phase out sugar imports and restore self-sufficiency in domestic sugar production by 2027.
However, stakeholders warn that prolonged closures could impact workers and smallholder farmers who depend on the mills for livelihoods, underscoring the urgent need for effective implementation of cane development plans.
As the sector enters this critical transition phase, the success of the SDL and the accuracy of the upcoming cane census will likely determine whether Kenya can achieve a sustainable sugar economy.
Written By Ian Maleve
