Sugar levy makes comeback in reforms targeting ailing sector

A boda boda rider transports sugarcane along the Mumias - Busia road on October 30, 2021. [Benjamin Sakwa, Standard] The Agriculture Ministry is set to re-introduce the sugar levy. Players are likely pass the new cost to consumers as the government maintains the levy is critical for developing the sector, including financing research. The reform process is also expected to see the return of the Kenya Sugar Board as the sector regulator. The sugar board and levy are among the proposals in the Sugar Bill that is currently being subjected to public participation by National Assembly's Committee on Agriculture and Livestock. The sugar board was a decade ago merged with other regulators overseeing different crops including the coffee and tea boards, to form the Agriculture and Food Authority (AFA). There have, however, been attempts to restore the sector-specific regulators. The sugar board, according to the Bill, will be charged with regulating, developing and promoting the sugar industry. The Bill also proposed the setting up of the Kenya Sugar Research Institute and the Sugar Arbitration Tribunal. The levy for locally produced sugar will be set by Agriculture Cabinet Secretary while the Bill has proposed a 10 per cent levy on imported sugar. "The Cabinet Secretary shall, in consultation with the board, by order of the Gazette, impose a levy on domestic sugar and a 10 per cent of Cost, Insurance and Freight (CIF) value on imported sugar to be known as the Sugar Development Levy," reads the proposed law, adding that firms that fail to pay the levy will pay a monthly penalty of five per cent on the amount due as levies. The funds raised through the levy will be used by the board in its regulation of the sector, including financing the research institute. Lack of research is among the issues cited for the decline of the local sugar sector. "The institute shall promote, coordinate and regulate research in sugar and sugar diseases, and expedite equitable access to research information, resources and technology and promote the application of research findings and technology in the development of sugar," reads the Bill. Industry players and the Kenyan public should give their views on the Bill by February 28 to National Assembly's Agriculture Committee. "The principal object of the Bill is to reinstate the Sugar Act which was repealed through the enactment of the Crops Act, 2013, and restore the roles of the Kenyan Sugar board currently being undertaken by the Sugar Directorate of the Agriculture and Food Authority," reads a memorandum of objects and reasons on the Bill. It adds that the local sugar industry has deteriorated over the last decade, with the problems appearing to have worsened when the Kenya Sugar Board was disbanded and the regulation taken over by AFA. "Since 2013, ineffective stewardship of the sugar industry by AFA has contributed to non-payment of farmers by public sugar companies, increased cost of sugar production, declining land acreage under sugar, lack of markets for sugar, failure to control imports and exports of sugar, poor management of sugar companies and lack of research and cane development activities," reads the memorandum. The Sugar Bill is part of the reforms that the Agriculture Ministry has been undertaking in the recent past as it seek to improve regulation for different crops. The reforms, which are expected to re-introduce other sector-specific regulators are eventually expected to see Agriculture and Food Authority (AFA) disbanded. The Authority was formed in 2014 through the AFA Act, 2013, and was part of operationalising the Crops Act, 2013.

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