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Strengthening internal supply chain is essential to secure future of the Dominican Republic cocoa sector

30 June 2013

A study of cocoa production in the Dominican Republic (DR) has been published by the University of Manchester. The study, commissioned by the chocolate company Green & Black’s and based on independent research, found considerable improvements in the quality of cocoa production in recent years in the DR. This is attributed to programmes supported by donors and the private sector, implemented through the National Confederation of Dominican Cocoa Producers (CONACADO). This has resulted in the DR “being able to produce and export significant tonnages of cocoa, commanding top world market prices (while also maintaining a high volume of exports of the traditional unfermented Sanchez cocoa)”.

The DR is “one of the leading exporters of organic and of Fairtrade cocoa”. While the tonnages exported are modest, “they considerably increase the visibility of the DR in particular markets.” Indeed, “in the UK and other countries, an increasing number of chocolate bars are explicitly marketed as using beans sourced from the DR.”

The study notes, therefore, that “the DR would seem ideally placed to further consolidate its standing in the global chocolate market, which is seeing an increased demand for ethically produced, high-quality cocoa.”

However, the analysis found that while high prices since 2009 had increased interest in cocoa production among some farmers, more generally there was declining interest in cocoa cultivation among young farmers, leading to a conclusion that “unless present overall trends are reversed, this raises questions as to the future sustainability of cocoa.”

This is not just a question of low levels of productivity and the effects of price volatility on on-farm investment in the cocoa sector. It also relates to the structure of payments in the cocoa sector in the light of evolving expenditure commitments. Put simply, “receiving seasonal payments based on fluctuating prices is not compatible with the requirement for rent, school fees, transport costs, health bills, communication costs, water and electricity bills, etc.”, all of which have to be paid regularly.

The study concluded that in the DR, steps needed to be taken “to address the disparity between its growing international market and its weakening local systems of production”. The key to this is seen as effecting changes to ensure that producers capture more benefits from the high prices obtainable for DR cocoa, thereby enabling them to “earn a living wage from cocoa”. It is argued that “this will require the Dominican government to mobilize resources and formulate policies to achieve positive and lasting changes [and will] also require companies in the DR and abroad to provide consistent support.”

In the current market context (where Fairtrade minimum prices are below world market prices), the financial contribution of Fairtrade certification was seen as being limited. There was thought to be a need for more frequent reviews of the Fairtrade price and Fairtrade premium levels, in the light of market price volatility.

In April 2013, Mondelez International announced a new initiative with the US Peace Corps to launch a 3-year training programme for cocoa farmers in the Dominican Republic.

Editorial comment

The Dominican Republic accounts for 90% of Caribbean production and is relatively well organised. For example, between 2009 and 2012 CONACADO implemented a successful pilot programme for around 3% of producers, which recorded an increase in productivity of 46% per hectare, on a financially sustainable basis. CONACADO has also been restructured into three divisions to focus on core activities:

  • CONACADO NGO: responsible for technical assistance;
  • CONACADO Cooperativa: in charge of savings and loans;
  • CONACADO Agroindustrial: responsible for marketing.

This potentially establishes a solid foundation for the consolidation of the cocoa sector in the Dominican Republic.

However, as elsewhere, the long-term future of cocoa production in the DR could be at risk unless issues related to the functioning of the cocoa supply chain are addressed (including in future the basis for integrating cocoa producers into the development of local value-added cocoa-based products).

Currently, this would appear to require ensuring that growing international market demand and the premium prices enjoyed for DR cocoa are reflected in higher and more regular payments to local cocoa farmers, in order to encourage investments in improved cocoa plant varieties and better crop management.

Unless a decent living wage can be secured from cocoa farming, then cocoa farming in the DR will increasingly be undertaken by a cadre of aging farmers on a low input basis, as just one of range of income-earning activities undertaken to meet daily expenses.

It should be noted that Ghana, a reliable and leading supplier of cocoa, has consistently retained a guaranteed price mechanism to producers, while Côte d’Ivoire has recently returned to this system. Against this background, it would seem that establishing strategies to reduce volatility and uncertainty for cocoa producers is essential to renew the cadre of cocoa farmers. Without such renewal, long-term prospects would appear bleak.


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