The Dominican Republic
March 28, 2008
The Dominican Republic (DR) imported just over $14 million worth of beans in 2006. But, in the January-November 2007 timeframe, the value of beans imported increased nearly 26 percent. According to Fradbelin Escarraman, Northarvests consultant in the Dominican Republic, demand for beans in the DR will continue to grow, and this presents opportunities for U.S. growers.
Speaking at the 2008 Bean Day in Fargo in January, Escarraman says a number of constraints exist in the DR market that the U.S. bean industry should be aware of as they seek to improve their position in this market.
Even though the DR implemented a free trade agreement with the U.S. and five Central American Countries (the DR-CAFTA) in 2005, beans remain protected with import permits. That is because domestic bean production is very labor intensive, and as such, they are very important to the local economy, says Escarraman.
The DR-CAFTA created a contingency that allows a portion of bean imports to enter the country duty free 8,560 MT the first year, and increasing 560 MT each year until the 15th year of the agreement when the market will become completely open. Currently, we are in year three of the agreement. The remaining imports are subject to import permits.
Escarraman explains that the distribution of import permits is very political. Rather than being issued directly to those in the local bean industry, the government issues them at will, largely as political favors. The recipients then sell the permits to the bean industry.
Time constraints are another issue to deal with. The DR government usually issues import permits for beans anywhere from August to October, after domestic production and marketing is complete. And the market closes to imported beans on January 15. This results in a very tight timeframe for transactions and delivery to take place, says Escarraman. Typically, it takes five to six weeks to move beans from the U.S. to the DR, and that is if everything goes smoothly.
Escarraman also says DR buyers worry about receiving quality product from the U.S. Sometimes, they will get a bean sample of excellent quality and color, but the delivered shipment does not match the quality of the sample, he says. The DR is very sensitive to bean color. An off-colored bean will sit on the shelf and will have to be discounted in order to sell. This costs the importer money.
Escarraman says the U.S. has the advantage now with a free trade agreement already in place in the DR. But, he says, even though the free trade agreement with Canada has currently been put on hold, we believe that eventually Canadian bean producers will achieve trade provisions similar to what the U.S. enjoys now.