Highlights

Wheat consumption in the Dominican Republic (DR) during Marketing Year (MY) 2017/2018 (July 2017/ June 2018) is forecast at 410,000 metric tons (MT), with imports remaining strong at 530,000 MT. Post forecasts imports of Corn to remain steady at 1,250,000 MT during MY 2017/18 (October 2017/ September 2018). During MY 2015/16, U.S. corn market share declined to 17 percent of total imports. Post expects this trend to reverse during MY 2016/17 due to lower prices compared to South America and increased availability. However, a record corn crop in Brazil and a larger global supply during MY 2017/18 is expected to eventually divert local demand back to South American sources. Rice continues to be one of the most important agricultural products grown in the DR. Production of milled rice for MY 2017/18 (July 2017/ June 2018) is forecast at 520,000 MT and is expected to remain stable.

Commodities:

Wheat, Corn and Rice (milled)

1. WHEAT

1.1. Production

The Dominican Republic (DR) does not produce wheat; the country is completely dependent on imports to supply the domestic market.

1.2. Consumption

The DR continues to have one of the highest per capita wheat and wheat products consumption rates in the Latin America and Caribbean Region: approximately 95 pounds per person per year. The apparent consumption (Total Supply, less formal exports and ending stocks) rate has averaged approximately 440,000 MT (excluding 2013) over the last five Calendar Years (CY). Nonetheless, substantial fluctuations in the amount of wheat processed for the domestic market is a strong indicator that large volumes of unrecorded exports are flowing across the border into Haiti, in addition to officially-registered exports.

For MY 2017/18, Post forecasts consumption of wheat and wheat products to remain stable at 410,000 MT. The country is home to a large milling industry and imports almost all of its wheat from the United States and Canada. Currently, the DR boasts a daily milling capacity of around 3,320 MT, with a current average utilization of 60 percent, divided among six different processors:

Molinos Modernos and Molinos Valle del Cibao process nearly 80 percent of all wheat imports.

Generally, the wheat flour produced is used for bread-making, crackers, cookies, cakes, pastries, and pasta. According to trade estimates, more than half of the wheat flour available in the DR is used to make a popular type of bread known as pan de agua. This item is consumed regularly by a broad spectrum of the population, but is more heavily consumed in urban areas. The product is typically produced by industrial bakers, along with small and medium-sized bakeries, and subsequently distributed to a variety of supermarkets, “mom-and-pop” stores, markets and/or other bakeries. In addition, wheat flour is also used for many of the products distributed in the Dominican Government’s feeding programs, especially school feeding. Bread, cookies and muffins are included in the meals that reach more than 1.5 million school children in public schools throughout the country.

It is also worth noting that the demand for wheat flour has increased in recent years due to growth in the HRI sector and tourism. Hotels consume large amounts of flour to make breads, cakes, pastries and other wheat-based products for approximately four million visitors to the DR annually.

While the majority of flour production is destined for the domestic market, the DR also exports considerable quantities of wheat flour and other finished products (e.g., crackers, pasta) to neighboring Haiti. To a lesser extent, the DR has increased its exports of wheat products to Venezuela, Puerto Rico, the United States and other markets throughout the region.

1.3. Stocks

The wheat milling industry in the Dominican Republic is mostly a “just in time” operation. Wheat shipments from the United States generally arrive on a reliable schedule with shipping times of around five days, reducing the need to assume storage costs. Shipments from Canada also arrive on reliable schedules, although with shipping times of approximately 10 days. Stocks are held by the private millers.

Overall, millers’ storage capacity is limited and varies considerably by processor. Among the six mills operating in the country, collective storage capacity is estimated to be 155,400 MT. For MY 2017/18, Post forecasts ending stocks at 52,000 MT, lower than the levels estimated for MY 2016/17 of 62,000 MT, due to expected strong exports and a stable local demand.

1.4. Trade

Imports

For MY 2017/18, Post forecasts imports of wheat and wheat products to the DR at 530,000 MT, slightly above the 520,000 MT estimated to be imported during MY 2016/17. Although traditional export markets for Dominican wheat products, such as Haiti (which restricts imports of wheat products from the DR) and Venezuela (which has lower demand due to its economic crisis), have decreased during the last two years, Dominican exports are expected to increase. Local millers are currently expanding their exports to markets throughout the Caribbean islands and the United States.

Imports of wheat grain

The DR imported 526,503 MT of wheat during MY 2015/16, a significant decrease from the 557,091 MT imported during MY 2014/15. The decrease in imports is explained by: 1) lower demand for wheat flour and wheat products from Haiti and Venezuela; and 2) lower local demand from one of the most important mills of the country, which shut down part of its operations to modernize them. During MY 2015/16 the DR imported approximately 59 percent of its wheat from the United States (309,718 MT), 36 percent from Canada (191,785 MT) and 5 percent from Russia (25,000 MT). On average from 2012 to 2016, the DR imported approximately 87 percent of its wheat grain (HS 1001) from the United States. Smaller amounts were supplied by Canada (an average of 12 percent during the same time period), Russia and Guatemala.

Currently, the majority of Dominican wheat imports are comprised of Hard Red Winter (HRW), Soft Red Winter (SRW) and Hard Red Spring (HRS). During MY 2015/16, the DR imported 38 percent HRW, mainly for bread production; 32 percent SRW, primarily used for cakes and pastry; and 30 percent HRS.

Exports

Post forecasts total exports of wheat and wheat products from the DR to remain stable at 130,000 Anecdotal reports from industry sources and comparative analysis of local consumption versus imports and mill throughput all indicate informal trade with Haiti of 30-35,000 MT per year in wheat and wheat products.

Haiti continues to be the most important export market for Dominican wheat products, accounting for 97 percent of total exports during MY 2015/16. Other markets for Dominican exports include the United States, Venezuela and some Caribbean Islands. For MY 2017/18, Post forecasts exports of wheat and wheat products from the DR to Haiti through formal trade channels at around 90,000 MT, slightly more than the 85,000 MT forecast to be exported during MY 2016/17. In May 2015, Haiti imposed import restrictions on Dominican wheat flour due to: 1) alleged content of potassium bromate in the flour composition; and, 2) the need to establish a more formal transportation channel for the flour, requiring Dominican shipments to be delivered by sea and/or containers. In the near term, Haiti is not expected to lift these restrictions.

The earthquake that struck Haiti in January 2010 had a direct impact on the export growth for wheat and wheat products from the DR. The only mill in Haiti at that time, Les Moulins d’Haiti (LMH), was destroyed, and Dominican mills immediately increased output to supply the neighboring market. Haiti’s annual wheat imports prior to the earthquake totaled approximately 200,000 MT, with the United States enjoying around 80 percent market share. The Dominican milling industry augmented its output between 40-50 percent (approximately 200,000 MT) in 2010 as a direct consequence of unmet demand in Haiti.

In December 2011, the LMH reopened. Additionally, since 2012, two other mills have started operating. However, Dominican contacts claim that none of the Haitian mills are working at full capacity. Further, those contacts claim that Haitian mills continue to deal with logistical challenges in distributing wheat products outside of Port au Prince. Therefore, the DR continues to supply the Haitian market with substantial amounts of wheat flour and products.

1.5. Policy

Within the CAFTA-DR, the DR applies no tariffs on the importation of wheat, but there are duties in place on wheat flour (2.8 percent) and pasta products classified under 1902.19 and 1902.30 (4 percent), along with a value-added tax (VAT) of 18 percent on the latter. In the case of couscous (1902.40), the DR currently applies no tariff, but the product is subject to a VAT of 18 percent.

1.6. Statistics

Wheat

2015/2016

2016/2017

2017/2018

Market Begin Year

Jul 2015

Jul 2016

Jul 2017

Dominican Republic

USDA

New Post

USDA

New Post

USDA

New Post

Area Harvested

0

0

0

0

0

0

Beginning Stocks

75

75

56

82

0

62

Production

0

0

0

0

0

0

MY Imports

541

544

550

520

0

530

TY Imports

541

544

550

520

0

530

TY Imp. from U.S.

313

313

0

415

0

420

Total Supply

616

619

606

602

0

592

MY Exports

150

127

140

130

0

130

TY Exports

150

127

140

130

0

130

Feed and Residual

0

0

0

0

0

0

FSI Consumption

410

410

410

410

0

410

Total Consumption

410

410

410

410

0

410

Ending Stocks

56

82

56

62

0

52

Total Distribution

616

619

606

602

0

592

2. CORN

2.1. Production

Corn production in the Dominican Republic continues to be limited. On average, annual production totals 40-45,000 MT, mostly produced in the southwest region of the country. Those levels are not expected to change in the near future. Generally, domestic production represents about 3 percent of total consumption. The DR also has very little sorghum production (around 1,000 MT annually, according to the Ministry of Agriculture) and imports very little as well. The DR’s imports of coarse grains are essentially comprised of yellow corn #2 or its equivalent.

2.2. Consumption

Corn is an important ingredient for the animal feed used in the DR poultry, egg and pork industries. Livestock producers import significant volumes of yellow corn for animal feed, typically around 1.0 million MT on an annual basis. Сlose to 70 percent of the corn supply is consumed in broiler and layer production, while swine consume about 15 percent and the food processing industry consumes around 11 percent. The remaining five percent is consumed by cattle, mostly from the dairy sector.

Each year, the country produces nearly 1.2 billion eggs and 190 million chickens. On a per capita basis, the DR consumes a staggering 70 pounds per year of chicken meat, coupled with approximately 16 pounds per year of pork (83,000 MT in total).

The DR increased its production of chickens by 10 million units in the past year, from 185 million chickens during CY 2015 to 195 million during CY 2016. This output was necessary to meet: 1) increased demand from the tourism sector; and 2) the Government’s Public Schools Feeding Program. This Program serves more than 2,800 public schools with extended schedule classes. Local producer associations are also lobbying to include egg consumption in the Feeding Program during CY 2017 and beyond. Corn is purchased by a small number of companies and buying groups composed of producer associations. The most important ones are: JUPROPE, Consejo, ASODEP, APROAMOLI, and Pollo Cibao. Nearly 80 percent of all corn is imported by these companies. For 2017/18, Post forecasts total consumption of corn at 1,300,000 MT, slightly less than the 1,350,000 MT forecast for 2016/17, due to better animal management practices and disease controls expected to be implemented that are anticipated to lower the feed and residual consumption.

2.3. Stocks

Storage facilities are limited and vary considerably among feed producers. Their collective storage capacity is estimated to be around 120,000 MT, while utilization of storage capacity is normally estimated at around 65-70 percent.

2.4. Trade

For MY 2017/18, Post forecasts imports of 1,250,000 MT, slightly down from the 1,300,000 MT forecasted for MY 2016/17. As mentioned above, the Government’s Public Schools Feeding Program will continue to increase its demand for chicken meat and will possibly start demanding eggs. However, animal management practices and disease controls expected to be implemented are anticipated to lower the feed and residual consumption.

Historically, the United States has dominated the corn market in the Dominican Republic, enjoying close to 100 percent market share until MY 2008/09. Since that year, persistent complaints concerning dust levels, grain cracking, mycotoxins, availability and shipping challenges, color, milling yields and relatively higher prices led many importers to source South American supplies, specifically from Brazil and Argentina. Even though this trend reversed itself during MY 2013/14, U.S. market share declined during MY 2015/16 to only 17 percent of imported corn. Post expects U.S. market share to increase during MY 2016/17 due to lower U.S. prices and increased availability. However, it is anticipated that a record corn crop in Brazil and a larger global supply during MY 2017/18 could encourage the local buyers to source from South America. Brazil continues to be the strongest competitor for corn to the DR market. During MY 2015/16,

Brazil supplied 49 percent of the total Dominican import volumes. Post forecasts lower exports from Brazil during MY 2016/17 due to a bad Brazilian crop last year. However, higher Brazilian exports are expected during MY 2017/18. Argentina also increased its volume of corn exports to the DR, exporting 310,687 MT during MY 2015/16, up from 135,896 MT during MY 2014/15.

Dominican exports of corn have not been significant. DR exported approximately 1,226 MT of corn during MY 2015/16; 95 percent of that total was destined for Haiti. Imported yellow corn that is not used in the production of animal feed is milled to produce corn meal and corn grits for both domestic consumption and export. The export total for both products (HS 1102 and 1103) during MY 2015/16 was approximately 40,000 MT. Some Dominican companies export these products to Haiti (through both formal and informal channels) and other markets throughout the region. Similarly, there are small amounts of corn-based animal feed products being exported to Cuba and other islands in the Caribbean.

2.4. Policy

As corn (along with soybean meal) constitutes one of the primary inputs in feed formulations, it is exempt from import duties in order to reduce costs for producers. Additionally, corn imports are not subject to the value-added tax (VAT).

As part of the DR’s commitments at the World Trade Organization (WTO), the country included corn among the agricultural products comprising the Technical Rectification (TR). Specifically, as part of its WTO commitments under the TR following the Uruguay Round, the Government of the DR established an initial tariff-rate quota (TRQ) of 703,000 MT for corn that increased gradually to 1,091,000 MT by 2004. Although the DR has a bound out-of-quota tariff rate of 40 percent, this tariff is not applied. The Government will not apply the out-of-quota rate on corn imports.

Decree 569-12 also included corn in the Automatic License System for the adjudication of the quota, which means that the import process is expedited for importers.

At the present time, the DR has legislation in place which requires every corn importer to purchase locally produced sorghum. Specifically, the National Corn and Sorghum Commission (CNMS is the Spanish acronym) requires the purchase of five percent of national sorghum production in exchange for the importation of corn. According to officials at the Ministry of Agriculture, the five percent figure applies regardless of the amount of corn imported.

Finally, it is worth noting that the DR does not currently restrict imports of Genetically Engineered commodities. Although the country has signed and ratified the Cartagena Protocol, the country’s regulatory framework still awaits congressional approval and has not yet been implemented. For imports of corn used as propagation material, the DR does have a rule in place that requires that the phytosanitary certificate accompanying the shipment state that said product “does not contain GMO material”.

2.5. Statistics

Corn

2015/2016

2016/2017

2017/2018

Market Begin Year

Oct 2015

Oct 2016

Oct 2017

Dominican Republic

USDA Official

New post

USDA

Official

New Post

USDA

New Post

Area Harvested

23

0

25

0

0

0

Beginning Stocks

135

135

185

190

0

183

Production

34

42

41

45

0

45

MY Imports

1351

1349

1350

1300

0

1250

TY Imports

1351

1349

1350

1300

0

1250

TY Imp. from U.S.

291

224

0

0

0

0

Total Supply

1520

1526

1576

1535

0

1478

MY Exports

5

1

0

2

0

2

TY Exports

5

1

0

2

0

2

Feed and Residual

1230

1235

1300

1250

0

1200

FSI Consumption

100

100

100

100

0

100

Total Consumption

1330

1335

1400

1350

0

1300

Ending Stocks

185

190

176

183

0

176

Total Distribution

1520

1526

1576

1535

0

1478

Rice is one of the most important agricultural products in the DR due to its political, economic and social impact on Dominican society. The country has approximately 30,500 rice producers, nearly 250,000 people are involved in the production, processing and marketing of rice, and the sector contributes approximately five percent annually to the Agricultural Gross Domestic Product.

Post forecasts a harvested area for rice of approximately 160,000 HA during MY 2017/18, slightly higher than the 155,000 HA projected for MY 2016/17, due to better expected climate patterns. This forecast represents a slight increase over the area harvested during MY 2015/16 (147,000 MT), when the country was affected by “La Niña”. This effect caused the destruction of production areas due to increased rainfalls. Rice is produced in two cycles during the year: 1) spring (April-May); and 2) winter (October-November). Recently, due to the use of short cycle varieties, a growing share of production is harvested during the May second crop (now almost 25 percent of total harvest).

Most Dominican rice is produced under irrigation. Rice under irrigation accounts for 99 percent of the total area. During MY 2017/18, Post forecasts “rough” rice production to be 776,000 MT and milled production at 520,000 MT, up 10,000 MT from MY 2016/17. Production is expected to increase due to improved yields after a return to normal climate patterns.

The average yield has varied between 4-5 MT/HA over the last ten years. Post sources expect yields to remain in this range in the coming years, due to lack of development of new varieties and production technologies.

3.2. Consumption

Post does not forecast any significant increase in consumption during MY 2017/18 or MY 2016/17. For MY 2017/18, consumption is forecast at 555,000 MT. Rice consumption has averaged 540,000 MT during the last four market years. In per capita terms, Dominicans consumed 115 pounds of rice each in MY 2015/2016, slightly more than the average consumption of 114 pounds per capita during MY’s 2013-2016.

3.3. Stocks

Post forecasts stock levels to decline to 117,000 MT during MY 2017/18. This forecast is significantly lower than the annual market year average, but still equal to 20 percent of annual consumption. Storage facilities are owned by both private processors (mills) and the Government.

3.4. Trade

Both imports and exports by the DR are limited. The country has been self-sufficient in rice in the last several years, and most rice imports come from the United States (99 percent of the MY 2015/16 total) thanks to a TRQ established under the CAFTA-DR agreement. Since rice is included in Basket V of the DR-CAFTA agreement (explained in section 3.5 below), out-of-quota rice imports currently pay a duty of 83.16 percent, effectively pricing them out of the market.

For MY 2017/18, Post forecasts imports of 20,000 MT, less than the 40,000 MT projected for MY 2016/17, needed to cover another production shortfall year. Dominican rice is exported on rare occasions, mainly to Haiti in the form of broken rice. For MY 2017/18, Post forecasts exports to remain stable at 10,000 MT.

3.5. Policy

Under the CAFTA-DR, the DR negotiated that rice be placed in Basket V, which concedes a longer-term tariff reduction period -- 20 years -- as well as establishing a 99 percent out-of-quota tariff rate. This out-of-quota tariff rate remained unchanged during the first 10 years of the Agreement, until 2015. From 2016 to 2020 the out-of-quota tariff rate is reduced by 8 percent annually, and from years 2021 to 2025 by 12 percent annually. Currently, the out-of-quota tariff rate for rice is 83.16 percent. Additionally, the DR negotiated a special safeguard with an additional tariff rate. This special safeguard can be applied until the end of the tariff reduction period.

Price controls are established via the Pignoracion Program, which operates during eight months of the year. The National Rice Commission (CONA) establishes a yearly price band (for paddy rice, FOB mill). The CONA is composed of the Ministry of Agriculture, producers, processors, retailers and other public institutions. Price bands are established both annually and for each of the two harvest periods (May and September), based on historic prices, varietals and production estimates. For millers, purchasing according to CONA price bands is not obligatory, but it is a requirement for participation in the Pignoracion Program.

In general terms, the Pignoracion Program is a financial services program benefiting rice producers and processors. Under the program, processors (factories, cooperatives, etc.) or producers buy or produce rice, then mill and either market the rice or hold it in storage. If held in storage, this rice can be pledged as collateral for loans from commercial or public lending institutions. For participants in the Pignoracion Program, the cost of storage, interest and insurance costs are covered by the Government (MoA). As rice constitutes one of the primary food sources for the population, it is exempt from value-added tax (VAT).

3.6. Statistics


Rice

2015/2016

2016/2017

2017/2018

Market Begin Year

Jul 2015

Jul 2016

Jul 2017

Dominican Republic

USDA

Official

New Post

USDA

Official

New Post

USDA

New Post

Official

Area Harvested

159

147

135

155

0

160

Beginning Stocks

194

194

180

157

0

142

Milled Production

536

502

477

510

0

520

Rough Production

800

749

712

761

0

776

Milling Rate (.9999)

6700

6700

6700

6700

0

6700

MY Imports

20

24

20

40

0

20

TY Imports

20

14

20

35

0

15

TY Imp. from U.S.

20

14

0

35

0

15

Total Supply

750

720

677

707

0

682

MY Exports

0

8

0

10

0

10

TY Exports

0

8

0

10

0

10

Consumption and Residual

570

555

575

555

0

555

Ending Stocks

180

157

102

142

0

117

Total Distribution

750

720

677

707

0

682