Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe is spearheading significant reforms in Kenya’s troubled sugar industry, including factory shutdowns and new levies, as the sector grapples with supply shortages and financial challenges.
The Kenya Sugar Board (KSB), operating under the Ministry of Agriculture’s oversight, announced a three-month suspension of sugarcane milling operations in the Upper and Lower Western regions, effective July 14, 2025.
KSB Acting CEO Jude Chesire communicated the decision to CS Kagwe in a letter dated July 10, citing an acute shortage of mature sugarcane that has forced factories to harvest immature cane. The suspension affects seven major facilities: Mumias, Butali, West Kenya (Kakamega), Nzoia, Naitiri (Bungoma), Busia Sugar Industry, and Olepito (Busia).
During the suspension period, KSB plans to conduct a comprehensive sugarcane availability survey to reset supply planning mechanisms. The move has sparked concerns among farmers and workers in key sugarcane-producing areas including Mumias, Busia, and Siaya, with fears of disrupted income streams.
New Sugar Development Levy Takes Effect
In a parallel development, CS Kagwe’s ministry implemented a 4% Sugar Development Levy on both domestically produced and imported sugar, effective July 1, 2025. The levy, mandated by the Sugar Act of 2022, has been assigned to the Kenya Revenue Authority (KRA) for collection, with remittances due by the 10th of each month.
The levy is projected to generate KSh 4 billion annually, with funds allocated across multiple development priorities: 40% (KSh 2 billion) for cane development, 15% each for road rehabilitation in sugarcane regions and research and innovation, 15% for factory rehabilitation, 5% for farmer organizations, and 10% for KSB administrative costs.
While the levy will increase sugar prices for consumers, Kagwe maintains it is essential for ensuring long-term industry stability and development.
Ministry Defends Factory Closures
On July 12, 2025, KSB, with backing from the Ministry of Agriculture, urged sugarcane farmers to support the planned three-month factory shutdowns. Chesire argued that allowing cane to mature properly will improve sucrose content and ultimately boost returns for farmers.
The statement, shared through the Ministry’s social media channels, emphasized that the closure represents a strategic move to maximize value for both farmers and millers, addressing the chronic low cane development that has plagued the sector.
Parliamentary Pressure Mounts
CS Kagwe faces increasing parliamentary scrutiny over his ministry’s management of the sugar sector. Members of Parliament have demanded lease documents and tender records related to the privatization of state-owned sugar mills, including Nzoia and Chemelil facilities.
The probe, reported on July 10, 2025, reflects growing concerns over the Ministry’s leasing strategy for mills to private investors such as West Kenya Sugar Company and Kibos Sugar. Kagwe has defended the leasing approach as crucial to reviving the struggling industry.
Industry Impact and Outlook
The combination of factory closures, new levies, and privatization efforts represents the most significant intervention in Kenya’s sugar sector in recent years. The measures aim to address fundamental challenges including inadequate cane supply, poor factory efficiency, and insufficient industry funding.
However, the reforms come at a cost to immediate stakeholders, with farmers facing income disruptions and consumers experiencing higher sugar prices. The success of Kagwe’s strategy will likely be measured by the sector’s performance when milling operations resume in October 2025.
