Sugar Markets in the Dominican Republic

Negotiated during the early 2000’s, the Free Trade Agreement between Central America, the Dominican Republic, and the United States (CAFTA-DR) came fully into effect in 2009. Very significant to the agriculture industry, several countries within the CAFTA-DR have legal provisions limiting the amount of agricultural commodities that can be imported into their respective national markets. This article explores the status of the sugar industry in the Dominican Republic, particularly within the CAFTA-DR framework.

Sugar Markets in the Dominican Republic

Being a Caribbean nation, the Dominican Republic is a significant sugarcane producer within the region. However, sugarcane growth relies heavily on yearlong rainfalls and, therefore, this crop can be severely affected by weather variations. During the 2014/15 season, the DR had a good harvest and a significant total production of approximately 496.000 metric tons. Whereas, the 2015/16 season yielded a substantially lower production of 379.000 metric tons, due mainly to a significant decrease in regional rainfall. For the 2016/17 season, total sugar production is expected to rebound to about 450.000 metric tons.

In the DR, four main enterprises dominate sugar production and only one of them accounts for a substantial amount of the refined sugar production. During 2014/15, the Central Romana sugar mill accounted for more than 152.000 metric tons of the country’s raw sugar production as well as 166.000 metric tons of the refined sugar. Though still the dominant producer within the DR, the production levels for Central Romana were somewhat lower during the 2015/16 season, due to the weather-provoked slowdown in national sugar production.

The domestic market within the DR consumes a substantial amount of the national sugar production. In fact, national tastes are split almost fifty-fifty between preferences for raw versus refined sugar. However, because of the CAFTA-DR and the attractive prices in the United States sugar market, the DR consistently exports some 185.000 metrics tons to the US on a yearly basis. This export quantity remains relatively stable because of the competitive prices between the two countries, but also because of the tariff-rate quota imposed by the US. Within the framework of the CAFTA-DR, the US applies a tariff-rate quota to several agricultural goods, such as sugar, cotton, nuts, tobacco, and beef, in order to protect domestic production. Similarly, as part of the quota assignment system, the DR usually receives a regular share of import allowance into the US every year. Consistently, the DR government and sugar industry use up most of their assigned quota of imports to the US.

To a much lesser extent, the DR exports some of its sugar production to neighboring Haiti. Similarly, the sugar mills and refineries keep private stocks ranging between 10.000 and 40.000 metric tons. Finally, in order to make up for its substantial exports and shortages in domestic production as well as achieve national market equilibrium, the DR imports sugar as a consumer good. During the 2015/16 year, the DR imported approximately 170.000 metric tons of sugar.

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