Focus: Sugar

It Cane Be Done

It Cane Be Done

May. 1, 2013

The production of sugar has shaped the history of the Dominican Republic, and today there are hopes the industry can reach past highs and become a significant magnet for investment.

The sugar industry is currently dominated by 16 major producers, of which 12 are state owned. Having struggled in the 1980s due to international sugar prices as low as $0.07 per pound, exporters presently enjoy prices as high as $0.20 per pound and are looking to reach capacity in production terms. Indeed, as the country's production currently stands at only 530,000 tons a year, far from the 1 million tons per year it used to enjoy, attracting investment will be key in the coming years.

Central Romana operates the most productive mill in the country and is the largest private employer in the Dominican Republic with 25,000 workers. With 200,000 acres on its books, the company dominates the sector and produces around 350,000 tons of sugar per year. However, the company's capacity is a far-higher 500,000, offering much room to grow. Together with Consorcio Azucarero Central, the pair produce 85% of the country's sugar.

The country's sugar industry is comparatively small when compared to major producers, such as Brazil and India. These two countries produce 38.7 million tons and 26 million tons of sugar per year, respectively. However, exporters in the Dominican Republic keep an eye on weather forecasts in such countries as damage to crops can drive up international prices. Despite external conditions, however, which include a preferential US quota, much can be done internally to boost production and increase the sector's attractiveness to investors. At present, 50,000 people are employed in the industry, a figure that needs to be doubled to ensure stable production levels in the future. Consumption in the country remains stable at just under 340,000 tons, with 170,000 of that consumed in raw form and the rest refined for use by the soft drink, juice, and confectionary industries. While the country meets its own refined sugar needs, it is an importer of raw sugar due to the amount of sugar that is exported through official channels, generally to the US, or unofficially into neighboring Haiti. Through the Caribbean Forum (CARIFORUM) economic partnership agreement (EPA), Dominican sugar is also beginning to gain a presence in European markets; however, exports are restricted until US quota commitments are filled. Under the quota agreement, the US sugar quota is divided among producers based on production levels.

Inazucar, or the Dominican Sugar Institute, was established in 1965 and is responsible for applying the National Sugar Policy throughout the sector. Inazucar's Executive Director, José Casimiro Ramos, underlined the institute's strategy for growth in a recent interview, “We believe that it is essential to strengthen the position of small producers across the country for the development of the sector," he mentioned, adding that, “we are closely working with these types of enterprises to provide them with financial and administrative advice." While small producers often work under agreements with larger companies, increasing financing options could be crucial to boosting production figures in the medium term. “Sugar producers in the Dominican Republic have bright future perspectives," said Ramos, concluding, “We expect growth years for the sector followed by new waves of investment and development."