Kenya is preparing its most fundamental shift in sugar policy in decades, moving to position sugarcane ethanol as a strategic fuel crop that could lower petrol prices, shrink the oil import bill, and create thousands of rural jobs across the country’s western sugar belt.

The clearest signal yet came during the opening of the 68th International Sugar Organization Seminar in Diani, where Deputy President Prof. Kithure Kindiki and Agriculture Cabinet Secretary Mutahi Kagwe laid out a policy roadmap that borrows heavily from Brazil’s globally celebrated sugarcane-to-fuel model.

Brazil’s numbers tell a compelling story. Over five decades, the South American giant has substituted more than four billion barrels of gasoline with ethanol, saving hundreds of billions of dollars while stabilising domestic fuel prices and building a multi-billion-dollar sugarcane economy. Presentation slides shown at the Diani conference indicated that ethanol-blended fuel in Brazil now sells significantly cheaper than conventional gasoline, a gap Kenyan policymakers believe they can replicate.

“We have focused completely on the farmer by increasing their income,” Kagwe told delegates, warning that the global sugar industry has concentrated too narrowly on “the sweetness of sugar and trade” while neglecting the welfare of farmers and workers who sustain the sector.

The Cabinet Secretary then made a remark that signals a genuine departure from half a century of sugar-centric policy. He said Kenya must urgently diversify into ethanol and other sugar by-products if the sector is to survive modern economic pressures and global energy disruptions.

“We are now thinking about ethanol seriously from sugar, especially with the global disruption of fuel prices,” Kagwe said. “We want sugar to become a by-product in Kenya, not the only product.”

The statement represents a dramatic break from decades of policy that treated sugar as the sole reason for growing sugarcane, despite persistent losses, ageing factories, delayed farmer payments and mounting debt across state-owned mills.

Deputy President Kindiki followed with a concrete commitment to rewrite the legal framework. He announced that the government will review the Sugar Act and existing regulations to firmly anchor ethanol production within Kenya’s legal and economic architecture. He also confirmed that the government will work closely with the Energy and Petroleum Regulatory Authority to develop binding regulations on fuel blending.

The move signals that sugarcane ethanol could become a permanent feature of Kenya’s long-term fuel strategy, driven by volatile global oil prices and growing pressure on foreign exchange reserves from petroleum imports that consistently rank among the country’s largest expenditure items.

Kenya’s sugar industry currently supports more than six million people directly and indirectly, particularly across western counties including Kisumu, Migori, Kakamega, Busia, and Homabay. Entire local economies in these regions depend on cane farming, yet farmers have endured years of delayed payments, collapsing co-operatives, and mills operating far below capacity.

CS Kagwe told delegates that Kenya’s reforms under the Sugar Act 2024 are already laying the groundwork for industrial modernisation, including targeted investment in ethanol production, cogeneration of electricity from bagasse, and broader value addition across the sugarcane value chain.

“The future of sugar lies beyond sugar itself,” Kagwe said, pointing to green energy, industrial ethanol, sustainable packaging, and circular economy solutions as the new frontiers for the sector.

The government also linked ethanol production to climate resilience and energy security. Locally produced biofuel could reduce dependence on imported petroleum while creating stable, predictable markets for farmers, who currently face brutal price swings depending on global sugar demand and import competition.

Kenya is now studying Brazil’s integrated sugarcane economy, where ethanol, electricity cogeneration, industrial alcohol, and sustainable biofuels have transformed sugarcane from a simple cash crop into a strategic industrial commodity. CS Kagwe said the government wants to learn directly from Brazil and the International Sugar Organization on how Kenya can manage the transition into a modern bio-economy powered by sugarcane.

For the millions of farmers in Kenya’s sugar belt, the shift from table sugar to ethanol represents both opportunity and uncertainty. The opportunity lies in a guaranteed industrial market for their crop, even when global sugar prices collapse. The uncertainty lies in whether Kenya’s ageing mills and fragmented co-operatives can retool fast enough to capture the moment.

But after decades of bailouts, political interference, and missed opportunities, the government’s message from Diani was unmistakable. Sugar as the sole product is no longer the future. Ethanol, electricity, and green energy are.