Three East African Community states are embroiled in a multi-million-dollar sugar importation tussle.

The tiff between Kenya, Uganda and Tanzania is threatening Kenyan millers as the expiry of measures that insulated them against duty-free imports from the Common Market for East and Southern Africa (Comesa) trading bloc draws close.

Kenyan millers have raised concern over massive dumping of duty-free sugar from Uganda and Tanzania, which they say is unprecedented as the two are sugar-deficit.

Tanzania says smuggling of sugar into the country has reached a high while Ugandan millers deny dumping the commodity in Kenya

(Also read: Uganda sugar imports origin unclear

Kenya’s millers have charged that since Tanzania and Uganda were given duty waivers on non-Comesa imports, the level of sugar from the two countries into Kenya has increased “tenfold.”

They say the lapse of the protective window, eight months from today, would open the local market to a duty-free sugar deluge from the 19-member Comesa bloc.

Kenya sought the Comesa safeguard in 2003 to protect its sugar industry by limiting duty-free imports. The safeguards were to expire in March 2008 but were extended to March next year.

However, the sugar industry remains vulnerable, with players warning of its collapse if the State fails to secure an extension of the safeguard.

The chairman of the Parliamentary Committee on Agriculture, Ayub Savula, said cheap imports had flooded Kenya, leading to a pile-up of local sugar at factories.

He said initial reports indicated that duty-free non-Comesa sugar was being repackaged in Tanzania and Uganda and re-exported to Kenya as produce from the two countries.

Sugar imports from Uganda have increased from an all-time low of 73 tonnes in 2011 to more than 22,190 tonnes by July this year, he claimed.

Peter Kebati, the managing director at the listed Mumias Sugar Company, said: “It’s true there is sugar coming in through the border and Lake Victoria duty-free. This has caused a drastic reduction in sugar prices and is affecting business for Kenyan millers.

“It has been going on for three months. We have lodged a complaint with the Kenya Revenue Authority and they have promised to act.”

Kenya Sugar Board (KSB) data shows millers were holding at least 19,992 metric tonnes of sugar in their warehouses as at August 2.

Relatively dear

“We are aware of complaints raised by a section of sugar millers in Kenya to the effect that there may be dumping of sugar from Uganda and Tanzania,” Kennedy Onyonyi, KRA’s senior deputy commissioner for marketing and communications, said.

“However, so far there is no evidence to that effect.”

Sugar remains relatively dear across the region, with the commodity retailing at the highest price in Kenya, at Ksh175 ($2) per kilogramme. In Tanzania it sells at Tsh2,000 ($1.25) and in Uganda at Ush3,800 ($1.5).

Kenya imposed a sugar export ban on Uganda last October on suspicion of dumping, but Jim Kabeho, the Uganda Sugarcane Technologists Association (USCTA) chairman, said they had not exported sugar to Kenya this year following harassment by KRA.

In December, exports to Kenya were held at Malaba border for six months.

“We only export to South Sudan and DRC,” he said.

Manufacturers from the three countries convened a crisis meeting at the KSB in December after Kenya accused Uganda and Tanzania of flooding its market with cheap sugar, having exported 26,000 tonnes in 2012 compared with four in 2011.

Saulo Busolo, a KSB director, said the dumping would get worse if the safeguard mechanism is not renewed.

“Our industries will not survive the stiff competition from Comesa states,” he said.

Uganda and Tanzania applied to the EAC Secretariat last year to import duty-free non-Comesa sugar to bridge a huge shortage. They were allowed 40,000 tonnes but brought in more than 100,000 tonnes.

(Read: Tanzania to import sugar as deficit bites)

Mr Kabeho however said Uganda stopped using the waiver in 2011.

Uganda’s three main sugar producers — Sugar Corporation of Uganda Limited (SCOUL), Kinyara Sugar Works and Kakira Sugar — produce 164,202 tonnes of sugar against consumption of 350,000 tonnes.

Tanzania also denied the claims, saying it faces similar problems as Kenya’s, though sources said the sugar came from Malawi.

Lying in stores

“TPC has 10,000 tonnes of sugar lying in its stores without a market, not because of lack of demand but due to excessive smuggled sugar on the street,” said Tanganyika Plantation Company (TPC) CEO Robert Baisac.

Late last year, Tanzania had to allow its two major producers, Kilombero Sugar Company (Illovo) and Kagera Sugar Company, to export nearly 19,500 tonnes due to excessive supply in the local market.

Patrick Mayoyo, Adam Ihucha, Dicta Asiimwe, Scola Kamau and Christabel Ligami