Cabinet Secretary for Agriculture and Livestock Development, Mutahi Kagwe, has defended the 4 per cent Sugar Development Levy.

Appearing before the Senate Committee on Delegated Legislation on October 2, 2025, he maintained that the percentage rate strikes the right balance between sustainability and industry development.

“Some industry players called for as low as 1 per cent while others argued for rates as high as 10 per cent. The Ministry, however, insisted that the 4 per cent rate already gazetted and implemented from July 2025, strikes the right balance between industry development and sustainability,” the statement on their X account read.

The levy applies to all local sugar millers and importers. For locally produced sugar, it is calculated on the ex-factory price, while for imported sugar, it is based on the cost, insurance, and freight (CIF) value.

The collected funds are channelled into the Sugar Development Fund, which supports key initiatives such as cane development, factory rehabilitation, research, and farmer organisations.

During the Senate session, industry stakeholders expressed differing views. Some argued that the levy should be reduced to ease financial pressure on struggling millers.

Others suggested raising it to generate more funds for long-term development. CS Kagwe, however, emphasised that the 4 per cent rate is sufficient to maintain a balance between funding sector growth and avoiding undue burden on producers.

Levy allocation

From the levy, forty per cent goes to cane development and productivity enhancement. Fifteen per cent is dedicated to factory rehabilitation, another 15 per cent to research and training at the Kenya Sugar Research and Training Institute, and 15 per cent to infrastructure projects in sugarcane-growing regions.

10 per cent of the levy supports the administration of the Sugar Board, while the remaining five per cent strengthens farmer organisations.

The total value of sugar imports has grown significantly over the years, rising from Ksh6.9 billion in 2015 to Ksh49.4 billion in 2023. During the same period, the volume of imported sugar also increased sharply, from 129,430 tonnes to 551,250 tonnes. As a result, the average nominal price per kilogram of imported sugar went up from Ksh53.9 to Ksh89.7.

Even after adjusting for inflation using 2014 as the base year, the real import price still shows a notable rise, increasing from Ksh57.7 to Ksh80 per kilogram. This indicates that sugar has steadily become more expensive over time.