Monthly Market Highlight
The Dominican Republic’s growing economy and thriving tourism sector have boosted its viability as a trading partner in the last decade. Thanks to the CAFTA-DR, a free trade agreement between Central America, the U.S., and the Dominican Republic, most goods are freely traded with limited or no tariffs. Unfortunately, some imported agricultural products still have tariffs and quotas in place to protect the domestic industry. Tariffs are intended to be phased out by 2020, but for now, the tax on pork imports over quota remains around 6%. Nevertheless, U.S. pork exports to the Dominican Republic totaled 94 million pounds in 2018, a 38% increase from 2017. The value of these exports also increased by 30% to $92.5 million.
Source: U.S. Meat Export Federation
Overview of the Dominican Republic
The Dominican Republic and neighboring nation, Haiti, make up the Island of Hispaniola in the Caribbean Sea. The Dominican Republic accounts for 18,800 square miles of total area, which is twice the size of the state of New Jersey. The climate on the eastern side of the island is tropical maritime, and its landscape includes rugged highlands, mountains, and fertile valleys. The population of the Dominican Republic was a reported 10.7 million in 2018, with nearly a third of the population living in the capital city of Santo Domingo. The Dominican Republic is the 20th largest export market for U.S. agricultural products. Exports totaled $1.3 billion in 2018, which is a 27% increase over the past decade.
Animal Protein Consumption and Domestic Industry
While the U.S. already owns 96% of The Dominican Republic market share for pork imports, an opportunity lies with the country’s potential for increased consumption. Per capita pork consumption in the Dominican Republic is about 26 pounds per year, which is the 5th lowest of all U.S. pork trading partners. The country is only 58% self-sufficient in pork production, so an increase in consumption would likely increase pork imports. Pork is second to poultry in terms of consumption, and in total the country ranks on the lower end of per capita meat consumption. Poultry is also the leader in production, followed by pork and beef, which have both trended slightly lower in the past decade. While total domestic protein production has decreased since 2008, rising incomes and demand from a growing tourism sector will continue to increase protein consumption.
According to a report by the Global Agricultural Information Network (GAIN), traditional channels are the cornerstone of the retail sector in the Dominican Republic. While modern channels such as supermarket chains, independent markets, and convenience stores are prominent in urban areas, the traditional channel owns 70-80% of the country’s retail food business. Neighborhood stores called “calmados” and walk-in food warehouses called “almacenes” are located in street markets and target low-to-middle income families. These traditional retail vendors have followed the national trends of increasing store size and product selection, which has allowed them to maintain such high market share. Consumers in the Dominican Republic are also beginning to place higher importance on the quality and nutritional value of their food. The GAIN report states that U.S. products are well regarded and deemed consistent with this developing standard.
For the time being, the most significant challenges in the Dominican market are the continued tariff and VAT tax rates, institutional continuity within the nation, and complying with Spanish labeling standards. Competing exporters in this market include Mexico, Brazil, Argentina, Denmark, Spain, and Costa Rica. As the Dominican Republic continues to develop its food distribution channels and phase out of agricultural duties on U.S. products, it has the potential to be a consistent and valuable market for U.S. pork.
Citizens of the Dominican Republic have begun to place more and more value on high quality and healthy products which serves as a great opportunity for U.S. exporters. The GAIN report states that Dominican consumers are strongly influenced by U.S. culture and place high value and trust in U.S. products. The U.S. Meat Export Federation (USMEF) strives to stay present in this market by hosting educational cooking displays, workshops, and collaborating with Dominican importers. Also, events like the annual Latin American Product Showcase provide opportunities for customers in the Dominican Republic to connect with U.S. pork exporters. Marketing U.S. pork as a safe, consistent, and delicious product can help build more frequent consumption habits and a stronger customer base.