Rain, Hail or Shine
By TBY | Dominican Republic | Aug 31, 2014
Rain, Hail or Shine
A CORNUCOPIA WITH CHALLENGES
Since the arrival of the Spanish five centuries ago, and until the 1980s, agriculture played a dominant role in the economy of the Dominican Republic. Fertile soils and favorable climatic conditions have yielded strong harvests regardless of a plethora of natural disasters including tropical storms, hurricanes, flooding, landslides, drought, and earthquakes. The phenomenal rise of tourism and the country’s increasingly diversified economy has seen the sector’s once all-encompassing supremacy of the country’s business activity diminish. Despite this, it still remains an important provider of employment and sees strong market demand both domestically and internationally, boasting an annual growth rate of around 5.5%.
According to Dr. Gero Vaagt, The Food and Agriculture Organization of the UN (FAO) Representative for the Dominican Republic, “…about 7% of GDP stems from agriculture, and about 14% of the country’s employment is provided through the agricultural sector.” It is interesting to note that the bulk of production does not come from large commercial holdings, but rather from small-scale farming. In fact approximately 70% of the Dominican Republic’s crops are derived this way. Much of this harvest provides staple food for domestic consumption including plantains, rice, potatoes, yams, tomatoes, and bananas. Crop cultivation dwarves the fish and meat industries of the Dominican Republic.
Traditionally, sugar and cocoa have been major agricultural exports. Emphasis is being placed on adding value to these heritage crops, and a special focus has been placed on organic cacao production. However, both sugar and cacao have seen declining export numbers in recent years and are being steadily replaced with coffee and tobacco, largely due to global market forces. A substantial 2 million hectares of land is dedicated to coffee growing, although it is tobacco that stands out as the major export crop. According to the Tobacco Institute of the Dominican Republic (Intabaco), it accounts for 43% of national agriculture exports. Intabaco estimates that around 105,000 people are employed in its cultivation. The country is well known for over 20 brands of cigars, with the lion’s share of exports finding their way to the US and Western Europe.
Despite the country’s tropical climate, lush jungles and mountainous, western interior, the Dominican Republic has frequently suffered drought and water shortages, especially when it comes to providing crop irrigation. This accounts for in excess of 80% of the country’s freshwater use, and changing global weather patterns threaten to reduce this supply.
The government of the Dominican Republic has been addressing this issue for the past 30 years through infrastructure development. Public investment has created an irrigation system that serves almost half of the country’s farmland, developed under the regulation of The Instituto Nacional de Recursos Hidráulicos (INDHRI). Most of these channels serve areas in valleys between the country’s mountain ranges. This network, which mainly provides for surface irrigation, is currently undergoing a renovation and upgrading process to match growing demand.
Critically, a number of large scale water reservoirs are set to come online or be expanded in the near future to provide the raw volume of water needed for the country’s increasingly thirsty fields. This includes the construction of the Monte Grande dam, which is to be largely paid for with international development financing from the Brazilian Federal Development Bank (BFDB). The strategically important Sabana Yegua dam is also being reconstructed to increase water capacity with an expected project completion date within the 2014-2015 period.
HELPING THE LITTLE GUY
Agricultural production in the Dominican Republic is dominated by small-scale farmers working individual plots of land. This characteristic garners tremendous political will to nurture the sector due the vast amount of citizens supported by, or employed either directly or indirectly by such farming methods. As a result, a number of government initiatives were carried out in 2013 to support small-scale farming through the provision of financing, technical knowledge and an insurance framework conducive to the sector’s success. A record government budget allocation of over $3.1 billion was provided in 2013 to finance these initiatives.
Supporting farmers through microfinance has been a key element of the government policy to strengthen the sector. This has mainly focused on producers of staples, including rice, beans, onion, garlic, and milk, but has also been made available to farmers growing export crops including cocoa, bananas, and fresh vegetables. Additionally, funding has been increased for processing and packaging facilities in order to add value to production. Such developments come with powerful marketing benefits, driving up export prices and guarantee quality and hygiene standards for international customers.
As Luis Ramón Rodríguez Peña, Minister of Agriculture explains, “This funding has been made possible through the Agricultural Bank, the Reserve Bank, and private commercial banks, through the release of legal reserves, and the Special Fund for Agricultural Development (FEDA). The result of these sectorial financing programs for the year 2013 it that is estimated that the agricultural sector will receive credits for about Ps31 billion ($720 million).”
Furthermore, an agricultural insurance system, created in March, 2013 through Law 157-09, has also been introduced to better protect the sector against natural disasters. Subsidies of 50% on insurance premiums have been provided for premium crop growers in order to attract new policy holders. Farmers are able to access the scheme through the Dominican Agriculture Insurance (AGRODOSA), or through any other national providers. It is believed that such a scheme, once made universal would help to shield the sector from the shocks seen as a result of the hurricanes and tropical cyclones endured over the past decade.
International export success has been seen beyond notable cash crops such as tobacco. In 2012, the Dominican Republic exceeded the $1 billion mark in agri-food exports for the first time, and in 2013 it is estimated that this figure reached as much as $1.3 billion. Notably, this included newly popular export products including organic bananas, organic cocoa, and fresh Asian vegetables. Traditional tropical fruits also contributed to this figure.
The Minister of Agriculture also told TBY that, “This export volume must keep widening together with the increase in greenhouses and packing plant investments, as well as in the production of fresh fruits such as avocados, mangoes, and pineapples. We are working to reach the goal of $2 billion at the end of the period of the constitutional government of President Danilo Medina.”
Such an ambitious goal may be hard to achieve, although the outlook is good given an upward trend in agri-food prices and positive trade conditions for the Dominican Republic. As a positive start to 2014, January saw the lifting of a ban on the import of Dominican poultry and eggs to neighboring Haiti, a traditionally strong export destination. The ban was introduced in March of 2013 following an Avian flu scare that was later found to be unsubstantiated. It is believed this will help to boost meat production in the country which is viewed as an underdeveloped agricultural sub-sector with tremendous potential by FAO officials.
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