Kenya gets 2-year extension of Comesa sugar imports cushion

The Common Market for Eastern and Southern Africa (Comesa) has granted Kenya a fresh two-year extension of sugar import limits from the regional trade bloc to revamp its ailing industry. Despite experiencing flooding in various regions across the area, seasonal rains have been largely beneficial for crop production. Nick Kwolek, Founder of KwolCo, shared insights on the market trends and the current agricultural landscape in the region. Kwolek mentioned that while there has been a slight drop in consumption of basic goods like rice, maize, and sugar in their raw form, the demand remains robust overall due to finished products like soft drinks and sweets. The region has had favorable rainfalls over the last two years, leading to a significant increase in commodity production. Countries like Tanzania, Ethiopia, and Uganda are expected to serve as major maize suppliers, especially to the deficit market of Kenya. However, recent heavy rains in Kenya have affected certain regions, potentially leading to a tight maize supply later in the year. The prices of maize have seen a notable 11% increase in Kenya, contrary to the declining trend typically observed between October and March. The market dynamics have been influenced by factors like COVID-19 and a strong crop yield, deviating from the usual price patterns. In the case of sugar, Kenya has witnessed improvements in its industry, with a significant uptick in production fueled by government policies supporting investments. Kwolek highlighted that private mills have played a crucial role in enhancing sugar production, with expectations of the government mills transitioning towards privatization. Kenya is poised to achieve self-sufficiency in sugar within the next few years if current trends continue. The extension of sugar import safeguards by Comesa has positively impacted both Kenya and other member countries by maintaining market stability and preferential access. This move ensures that Kenya continues to regulate its sugar imports while allowing Comesa members to benefit from the high-priced market. The economic conditions in South Sudan have had limited effects on the commodity market, with ongoing consumption patterns despite challenges in the country. The seasonal nature of commodity trade remains relatively stable, with inquiries for basic goods picking up as roads gradually open for trade. On the topic of desert locusts, the anticipated second wave is forecasted to hit around mid-December, primarily affecting northern Kenya. The breeding conditions in neighboring countries like Somalia and Ethiopia suggest an imminent swarm towards Kenya, although the impact on staple crops like maize is expected to be minimal. The agriculture sector remains vigilant against potential disruptions and is prepared to mitigate any adverse effects.