The Bitter Taste of Sugar

by Aurelie Walker, Trade Policy Advisor, Fairtrade Foundation

Kenya, the East African powerhouse, has just sent a bitter message to its neighbours calling for tariffs on their sugar imported into the country to be maintained, protecting their own sugar industry at the expense of farmers in other African nations.

36% of sugar imported into Kenya is from the 19 country bloc of COMESA - the Common Market for Eastern and Southern Africa. But Kenya wants to maintain its high tariffs to protect its own farmers and millers thereby reneging on commitments to the bloc to liberalise trade in sugar made nearly 5 years ago. This blow to regional integration comes days after half of African countries on the continent, including Kenya, agreed to launch negotiations on a Tripartite Free Trade Area; negotiations that are to be concluded in 36 months. 

The special place of Sugar

Sugar is the most heavily supported agricultural product in Africa and subsequently holds a special place in the tripartite region;  According to the Trade Law Centre for Southern Africa (TRALAC) one third of sugar in Africa is produced by COMESA, and 90% of all African sugar is produced in the tripartite region. Two of Kenya’s neighbours, Mauritius and South Africa, are among the top 10 sugar exporters in the world exporting $292 and $221 million worth of sugar in 2008.  The leader, Brazil, exported $5483 while Kenya exported $29 million in the same year.  If Kenya won’t open its sugar market to 19 COMESA countries can we really expect it to open to the 26 countries in the tripartite region?

Regional markets as a life-line

As growth in the Euro zone -  the traditional export markets of the continent – stagnates, regional markets are being hailed as growth opportunities for Africa.  The growth rate in the European sugar market is set at 1.5% for the next 10 years. Regional markets in Africa will have to open for sugar to remain a viable option for African producers who face increasing competition for the lucrative European sugar market.  Fairtrade can be part of this trend, with African Fairtrade products already available for sale in Kenya and South Africa, the potential for extending trade in Fairtrade products within Africa is exciting. But can it happen?

Sweet dreams?

Only 10% of Africa’s trade is with other African countries. The view from a glass half full is that this provides significant growth potential, but from a glass half empty the future does not look bright.  The UK government remains positive; its Africa Free Trade Initiative launched in February this year will lead to ‘reduced bureaucracy, improved transport infrastructure and more efficient border crossings’.  But the analysis that followed set a more cautious tone.  It concluded that ‘a high level of political commitment over an extended period of time’ is needed to rectify the limited progress on the continent to date. Kenya denying its neighbours duty free access to its sugar market could mean that a tripartite free trade area by 2015 will remain a sweet dream.