Hand to Hand

Hand to Hand

Agriculture currently comprises 7.7% of GDP in the Dominican Republic and the sector employs approximately 21% of the population. In addition, 40% of the country’s exports are agricultural products, many of which are sourced from the thousands of small farmers operating in the country.

ALL-AROUND SUPPORT

In a move to demonstrate the country’s focus on agriculture, President Medina announced his intention to finance local farmers by investing $1 billion in the sector through Banco Agrí­cola. The investment is largely geared to repair the damage caused by the financial crisis of 2003, and will also help to mitigate the negative impacts of external factors such as drought and plant disease. The President also spent the first 10 months of his term visiting various banana, pineapple, mango, and ginger producers, demonstrating his early commitment to expanding the sector and identifying the needs of its workforce. In October 2012, the government launched its plan to protect communities from the environmental concerns the President had observed first hand, such as flooding.

As a main channel for government financing in the agriculture sector, Banco Agrí­cola disbursed over Ps6.5 billion in 2011, much of which was offered to producers farming more than one type of crop. The bank was established as an autonomous institution that protects farmers with insurance, especially in terms of weather-affected crops. “Our goal is to provide financial resources to agriculture producers while trying to make their activity and that of the bank completely profitable,” Ángel Estévez, General Administrator of Banco Agrí­cola, explained to TBY. In 2013, the bank is seeking ways to generate its own economic resources and create more synergies for its clients.

The Ministry of Agriculture is another key player in the sector, looking to boost production levels in the industry and promote agri-business in rural parts of the country. In 2012, the Ministry of Agriculture emphasized its plans to dedicate 5,219 hectares of land to agriculture and make significant investments to combat plant disease, which was linked to the decreased production of rice in many agricultural areas in 2011. To target and encourage small- and medium-sized farms, the Ministry announced plans to rebuild 1,200 kilometers of farm roads and distribute thousands of tons of seeds to farmers in low-income parts of the country, thereby creating up to 500,000 jobs.

International organizations such as the Inter-American Development Bank (IDB) have also pledged support to the Dominican Republic in 2013. One IDB program is expected to benefit 54,000 small farmers and increase their average net income per hectare by 12% over the next decade, executed through a $22 million grant that will improve agricultural technology and research in the country. The Food and Agriculture Organization (FAO) has also focused on advising small producers in the Dominican Republic as they seek to produce output with higher value-added. In 2013, the FAO highlighted the development of the fish and meat industries as key to the country’s growth, emphasizing that increased FDI in the segment would bring about job creation and profit the sector as a whole.

MAIN CROPS

With levels of traditional crop production rising, coffee and tobacco have taken center stage as the country’s star performers. In 2011, coffee production rose 18.2%, and growth in tobacco production weighed in at 29.3%. Positive growth in coffee and tobacco was attributed to the larger land areas dedicated to each crop and beneficial weather conditions in the country, as well as higher crop yields. Meanwhile, export crops such as sugar and cocoa saw decreasing production levels at -5% and -2.2%, respectively. Although drought in April and May 2012 severely affected production, these declining output levels were in line with a wider global trend. Other crops, such as tomatoes, bananas, yams, and potatoes, registered a collective 12.4% growth in 2011, coinciding with cultivated land expansion of 20.4% and reflecting higher yields than the previous year.

The Dominican Republic is home to a long tradition of coffee production, with over 2 million hectares of land allocated for the crop. In the past decade, new advancements in technology and increased prices have set the industry on a path toward growth. Spearheading the sector is the Dominican Coffee Council (CODOCAFE), an organization that has looked toward exports and the manufacturing of high-end products to make the sector more robust. Emphasizing the role of private investors in the local coffee business, José Fermí­n Núñez, Executive Director of CODOCAFE, explained to TBY that “coffee consumption has increased considerably in the last few years, and we believe that more credit to support the sector and other private initiatives can boost quality and specialization.”

However, the coffee industry is not alone in its expectations for future investment and development—sugar producers are also predicting a new wave of growth years in the future, sparked by price increases and the implementation of new projects. Although the production of sugar in the Dominican Republic has declined since the 1980s, sugar-producing giants such as Central Romana boast production capacity reaching 500,000 tons annually. However, at 350,000 tons per year, the company’s current production levels still only reaches part of its potential. José Casimiro Ramos, Executive Director of Inazucar, highlighted the potential for the country to reach 1 million tons annually in the coming years. “Today, the industry employs around 50,000 people, and we foresee the need for more people to cover the future needs of the sector, which could be as much as twice the current figure,” he said.

IRRIGATION

Since the 1980s, the Dominican Republic has operated an extensive irrigation system that covers approximately 46% of the country. The Instituto Nacional de Recursos Hidráulicos (INDHRI), the main regulator of the Dominican Republic’s irrigation, is renovating and transforming the country’s existing lines and focusing on adding new segments in the coming years. “Our priorities for the next four years will be the construction of three large dams, one in the Cibao region, the Monte Grande dam in the south, and the finalization of the reconstruction of the Sabana Yegua, the largest and most important one, which will be completed in 2014,” Olgo Fernández R., Executive Director of INDRHI, told TBY. These and other projects invite private participation for the strengthening and cleaning of canals, the operation of heavy and light machinery operators, and the implementation of updated pumping systems.