Why Has Sugar Milling Been Suspended in Western Kenya?
The government has temporarily suspended all sugar milling operations in the Upper and Lower Western regions for three months, starting July 11, 2025. This action targets major processors including Nzoia Sugar Company, Butali Sugar Mills, West Kenya Sugar Company (and its Olepito and Naitiri branches), Mumias Sugar (2021) Ltd, and Busia Sugar Industry Ltd.
Kenya Sugar Board CEO Jude Chesire said the move follows a stakeholder meeting in Kisumu on July 4, where it was confirmed that mature cane supply in both regions has dropped significantly. “This suspension will allow sugarcane to mature and enable a reset in cane supply planning. We will also conduct a cane census within two months to better assess field readiness ahead of resuming operations,” Chesire said.
The shortage has been blamed on poor planning, leading to early harvesting and reduced production levels in the first half of 2025. Millers have now been directed to focus on cane development to secure long-term raw material supply.
What Is the Sugar Development Levy and How Will It Work?
Coinciding with the suspension is the implementation of the new Sugar Development Levy (SDL), effective July 1, 2025. Set at 4%, the SDL will apply to both locally produced sugar (based on ex-factory price) and imported sugar (based on CIF value). The Kenya Revenue Authority (KRA) will handle levy collection, with payments due by the 10th of each month following production or importation. KRA is expected to release compliance guidelines soon.
The levy is part of a broader national strategy aimed at rejuvenating the sugar sector and ending sugar imports by 2027. The National Treasury has also approved the transfer of the Sugar Development Fund from the Commodity Fund to the Kenya Sugar Board to improve accountability and financing.
How Will SDL Funds Be Used to Rebuild the Sugar Sector?
According to Chesire, the SDL is projected to raise over Ksh.5 billion annually. The funds will be allocated as follows:
- 40% (approx. Ksh.2 billion) to cane development
- 15% (Ksh.600 million) to road upgrades in sugar zones
- 15% (Ksh.600 million) to research and innovation
- 15% (Ksh.600 million) to factory modernization
- 5% (Ksh.200 million) to support farmer institutions
- 10% to administrative functions under the Kenya Sugar Board
From September 1, 2025, all stakeholders with active loans will begin remitting repayments directly to the Sugar Board.
“With the SDL in place and proper financing mechanisms, we are now on the right track. The failures of the past must not be repeated. This is the moment to reclaim the future of Kenya’s sugar industry,” Chesire said.
By Risper Akinyi