See also …
FAS Reports
DR7015,
DR7014, and
DR6002
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How Will CAFTA-DR Affect
This Market? |
|
With implementation beginning last March,
CAFTA-DR (the Dominican Republic-Central
America-United States Free Trade Agreement)
is expected to accelerate economic growth in
the Dominican Republic and increase U.S.
agricultural exports. Though tariff-rate
quotas will delay full benefits for some
products until 2027, the agreement
immediately began contributing to lowering
prices an average 20 percent for many U.S.
foods exported to the Dominican Republic.
Further details about specific agricultural
products covered by CAFTA-DR are available
at:
http://www.fas.usda.gov/info/factsheets/CAFTA/overall021105a.html
|
The market for imported natural, organic, and other
health food products in the Dominican
Republic — still a
small niche segment at 4 percent of consumer-oriented
products — has grown a big 30 percent per year over the
past 5 years. This trend is expected to continue, as
consumers become more affluent and health conscious, and
look for alternatives to local produce grown with
pesticides.
About 70 percent of these products, mostly processed,
come
from the United States, with total U.S. exports expected
to reach $12 million in 2007. U.S. products face some
competition from European nations in processed snacks
and China in beverages, but no import statistics are
available for those countries.
Some locally produced organic fruits and vegetables
are available in the Dominican marketplace, but most
production is export oriented. Dominican producers have
begun responding to international demand for organic
bananas, cocoa, coffee, mangoes, cane sugar, limes, and
other horticultural products.
Market Access
Dominican food safety and import laws that apply to
traditional foods also apply to natural, organic, and
other health foods. U.S. labeling and food standards are
accepted now in the Dominican Republic,
but labels in Spanish will be enforced by the end of
2007.
|
Costs To Weigh When
Exporting
to Dominican Republic |
|
Freight: |
$2,500-3,000 per
42,000-pound container |
|
Insurance: |
1.5 percent of loaded value |
|
Customs Commission: |
0.4 percent of landed value |
|
Value-Added Tax: |
16 percent of landed value |
|
Margin for Importer: |
25-40 percent |
|
Margin for Retailer: |
25-35 percent |
|
Proximity, Quality Enhance
U.S. Ability
To Compete in Dominican
Republic |
|
Advantages |
Challenges |
-
U.S. products dominate market
-
Companies are discovering great potential in
market
-
Consumers view U.S. products as being high
quality
-
Most distributors
represent U.S. lines, or are U.S. franchises
-
Dominicans living in the United States who
retire back home will continue to use U.S.
products
|
|
Food imports easily enter the Dominican market,
usually through a local small importer or distributor,
but supermarkets are beginning to import directly. Price
and product quality are both considered important. Major
supermarkets and specialty stores are becoming key
sellers as they allocate more space for and promote
these products. Some supermarkets are including a full
range of natural, organic, and other health food
products in their private labels.
Best Prospects
There are no specific tariff codes for natural, organic,
or other health food products, which increases the
difficulty of keeping track of exports. However, many
products have considerable potential according to
industry surveys. Best selling dried fruits, cereals,
peanut butter, power bars, and salad dressings are
expected to benefit immediately under the duty-free
provisions of CAFTA-DR. Other good prospects with
phased-out tariff reductions include chocolates, cookies
and crackers, soups and broth, sweeteners and sugar
substitutes, and sauces.
Wagner A. Mendez is a marketing specialist with the FAS
Office of Agricultural Affairs in Santo Domingo,
Dominican Republic. E-mail:
