Factors influencing the supply of sugar: an Analysis for Kenya 1970-2003

Abstract

Domestic demand for sugar in Kenya has continued to outstrip domestic production levels over the last three decades. Over the last ten years the country has registered an average annual deficit in sugar production of one ninety thousand metric tones. This gap between domestic production and domestic demand has to be met through importation.

The main objective of this study was to investigate the factors that influence supply of sugar in

Kenya with the aim of proposing policy measures to improve production.

The study found out that producer price, area under sugarcane and average annual rainfall and structural policies implementation phase are significant factors influencing sugar production The broad results indicate that improving producer price of sugarcane, acreage under sugarcane and availability of water (e.g through irrigation) would improve the quantity of sugarcane supplied Results of the study also indicate that implementation of structural adjustment policies adversely affects sugarcane production.

Previous periods yields of sugarcane and the periods before introduction of SAPs and S;\Ps policy formulation stage were found not to influence sugarcane production. This may be attributed to the fact that sugarcane is perishable industrial crop.

Policies recommended from the findings of the study include that producer prices be made more favourable to sugarcane farmers, extensive methods of farming be enhanced and irrigation methods be employed.

The short-run and long-run elasticities of output to various variables are equal implying that policy impact on sugarcane production will persist into the future and have a permanent impact