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Overseas Trip Report

 

 

Reporting Officer:      Paul Jennings, CEO
Country Visited:        The Dominican Republic
Period Overseas:        July 11-18, 2010
Event:                         The 46th Annual Meeting, Caribbean Food Crops Society
                                    Held at Boca Chica, Dom. Rep, July 11-17, 2010
Purpose of Visit:                   

  1. To present paper ‘Revitalization of the Jamaican Dairy Sector III. Biogas  as an Option for Enhancing International Competitiveness’, jointly authored with R.C. Miller, D.L. Ffrench and B.G. Duffus (BDPAJ).
  2. To utilize the opportunity presented, to hold discussions with the principals involved in the leadership of the national dairy development programme of the Dominican Republic.

Cost:                            $237,762.00                           

 

Summary of Related Activities

  1. The theme of the 46th Annual Meeting of the CFCS was ‘Protected Agriculture: A Technological Option for the Competitiveness of the Caribbean’.  The sub-themes and distribution of plenary and technical presentations tabulated below, illustrate the major emphases of the meeting.

Sub-Theme/Format

Protected
Agric

Plant
Health

Crop
Prod.

Anim.
Prod.

Econ &
Rural Soci.

Misc

Plenaries

5

3

-

-

-

-

Panel Discussions

1

1

-

-

-

-

Technical Papers

14

18 + 8

 

5

4

17

Posters

 

 

 

 

 

78

Field Trip

 

 

 

 

 

1 (3)

Miscellaneous presentations included papers on natural resources and environmental management, plant nutrition and soil management as well as post-harvest management and value-added production. The paper presented on behalf of the JDDB was included under the theme ‘Economics and Rural Sociology’. There was one other paper on milk production originating in Barbados and relating the effects of season on forage and milk quality, a survey conducted by CARDI in collaboration with the University of Guyana. The other livestock papers covered aspects of production in sheep, pigs and bees.

Of the 14 technical papers on Protected Agriculture, 12 originated in the Dominican Republic, an indication of the advances made with the successful commercialization of this approach to horticultural (vegetable, floral) production by this regional neighbour.

Of a total of 26 papers on Plant Health 18, were covered in a symposium on Invasive Species held under the aegis of the USDA T-Star programme which has financed focused research in this area by the Universities of Florida, Puerto Rico and the US Virgin Islands since 2003. Significant focus was given to the control of citrus greening which poses a significant threat to the production of this crop throughout the tropical and sub-tropical Americas. Dr. Lisa Myers of MOAF, R&D, delivered a presentation on the control of Citrus Leprosis in Jamaica.

Friday July 16, 2010 was dedicated to Field Trips to three separate regions of the country allowing a first-hand view, not only of research and commercial initiatives in protected agriculture, but also in cocoa, rice and fruit production. The organized Field Trip was foregone in favour of a meeting with CONALECHE, the Dairy Board equivalent in the Dominican Republic.

It ought to be emphasized that in regard to food security, the Dominican Republic boasts a 90 percent self-sufficiency rate, attaining full self-sufficiency in rice production and more than 60 percent in milk and dairy products. Agriculture contributes 18 percent of total GDP; the dairy sector accounting for 33 percent of agricultural GDP.

Observations on Dairy Development in the Dominican Republic

At the outset, it ought to be stated that the arguably most striking characteristic of Agricultural Development in the Dominican Republic has been the consistency of public policy on ‘Food Sovereignty’ which has survived three changes of political administration. This attribution was made by Dr. Alvaro Frias, Deputy Director of Livestock in charge of the programme MEGALECHE, a focused dairy extension programme established under the Department of Agriculture since 2001. His sentiments were echoed by Gen. (Ret.) Juan C. Recio, Executive Director of CONALECHE, with whom I met two days later on Friday, July 16th, along with other Board members and members of their Advisory Committee.

Milk production in the Dominican Republic in 2009, stood at 648 million litres, compared to 410 million litres at the simultaneous launch of MEGALECHE and CONALECHE in 2001.  Much of this increase has been due to increase of production from the approximately 10,000 then existing milk producers as there have been few new entrants at the primary production level.  Relevant statistics on industry performance are tabulated below.

Production and Consumption Statistics Dominican Republic

 

2001

2004

2006

2008

2009

Fresh Milk
Prod. (L.M)

410

384

501

556

648

Import Vol- EU
(MT’000)

-

33.71

45.16

39.72

34.51

Import Value - EU
(US$M)

-

103.1

161.9

232.7

153.8

Indicative Self-sufficiency (%)

-

50

-

-

62

No. Farmers

 

 

 

 

10,000

Commercial producers

 

 

 

 

6,000

Breeding Cows

 

 

 

 

350,000

Pastures (ha)

 

 

 

 

1.1M

Persons employed

 

 

 

 

241,000

No. processing plants

 

 

 

 

8

Cottage cheeses
Producers

 

 

 

 

397

Cheese as % output

 

 

 

 

53

Summary Features of the Dairy Sector in the DR are:

    • Milk production has increased by 53% during the nine years since 2001, and consistently so following a dip in 2003-2004.
    • Value of output from local dairy sector (2009) – US$210 million.
    • Dairy imports from the EU accounted for 70 percent of total imports between 2004 and 2009 averaging 44,000 tonnes for the period
    • Self sufficiency rates have grown by 2.4 percentage units per year between 2004-2009
    • Cheese production has been traditionally practiced at cottage level and remains the single largest component of value-added.
    • Fresh cheeses are by far the major component of production
    • Small and medium scale farmers (<80 cows) produce 75 percent of total output
    • The 8 processing plants are primarily focused on the liquid milk market, producing UHT products and evaporated and sweetened condensed milk. Production of yogurt has been increasing in recent years;
    • Nestle, the largest processor/manufacturer purchased approximately 150,000 litres fresh milk per day in 2009. Rica, a local processor mainly of UHT products, is the second largest purchaser of fresh milk.
    • By legislation, the National School Milk programme was established on the basis of a minimum of 50 percent fresh milk in a recombined school breakfast product
    • The farmer members of CONALECHE are concerned that this legislation has been circumvented by PARMLAAT, originally an exclusive importer, and currently sole supplier to the School Milk Programme, who reportedly has been able to incorporate a range of imports other than milk powder in the product supplied;
    • The school milk programme absorbs 500,000 litres of recombined milk per day. The price offered to processors is considered unattractive by most, given current farm gate and import prices;
    • Farm-gate price currently averages US$0.44 per litre. Supermarket prices for pasteurized and UHT  milk are respectively US$1.21 and $1.29
    • Per capita consumption (2009) – 82 litres/annum (224.7 ml/day cf. WHO – 200 ml) – Jamaica (2008) – 110 ml per capita per day.
    • Immediate threat posed by EPA/CAFTA parity as duty concessions to US imports under CAFTA are required to be extended to EU within five years (WTO – MFN clause)
    • Critical Elements of Public Policy on Dairy Development in the DR currently and in the recent past have been:

      a. Tariff Rate Quota (TRQ) on imports since accession to WTO in 1995 (In-quota – 20%; Ex-quota – 56%)

      b. Price support to farmers of up to 8 cents (RD) per litre. Reportedly discontinued within the last two years;

      c. Fertilizer subsidy – continuance uncertain;

      d. Financial support for planting materials and forage equipment

      e. Concessional loans for dairy development

      f. Legislation enabling establishment of CONALECHE in 2001, with Minister of Agriculture as Chairman of Board which includes Ministry of Health and Ministry of Industry representatives, plus two farmer- and one industry- rep. Its functions are Regulatory and Promotional;

      g. The Board is supported by an Advisory body comprising producers and processors.

      h. CONALECHE is financed primarily from the public purse (via TRQ) with a budgeted annual contribution of 120 million pesos (FX rate- 36:1 US$). Funds flow from the Central Government has been consistent and timely. A cess on fresh milk of 4 DR cents per litre is payable to CONALECHE, equally apportioned between farmer and processor. Based upon an estimate of only 47 percent of total production entering the formal trade, the industry contribution to CONALECHE would not have exceeded 6 million pesos, approximately 5 percent of total financing;

      i. MEGALECHE, a programme of focused extension support to the dairy industry, was established within the Direccion General de Ganaderia, contemporaneously with CONALECHE. Its activities and outreach services are devolved into six regional units, corresponding with the major milk producing regions. Its major areas of focus are in improved fodder management, improved milk quality and improved reproduction and health. MEGALECHE operates with a total staff component of 42 technical and administrative persons and receives a supplemental contribution, above administrative expenses, of 4 million pesos per month from CONALECHE to support outreach activities.

      j. MEGALECHE also conducts on behalf of CONALECHE, a monthly survey of Cost of Milk Production, based upon a small sample of representative farms. The data serves to inform the process of negotiation between processors and producers. By legislation, CONALECHE is not allowed to set milk prices;

      k. MEGALECHE also provides a reference laboratory for milk testing and validation on behalf of CONALECHE which establishes, reviews and monitors milk quality standards for the industry;

      l. Concessional loan support (10 vs 18 percent) to milk producers financed by CONALECHE through the Agriculture Development Bank. CONALECHE allocates 5 million pesos per month to the Agri Dev Bank. To date 1,991 milk producers have benefitted from loans totaling 607.7 million pesos with a corresponding capital recovery of 337.5 million pesos.

      Summary of Learnings and Follow-up Actions from Trip

      In summary, the major learnings from this trip, specifically with respect to applicability to the Jamaican dairy sector are:

        I. A consistent focus on improving producer efficiency is warranted;

        II. A national consensus on Food Sovereignty is an inescapable pre-condition for driving increased domestic food production;

        III. Establishment of and consistent resource provision to the relevant institutional structures  is critical to maintaining a focused approach to the identified strategic sectors;

        IV. A review of Jamaica’s policy with respect to tariff structure is warranted in light of the obvious effectiveness of the TRQ in providing growth room for the Dominican dairy sector;

        V. There is an opportunity to access significant financial support to the Jamaican dairy sector under the EPA, through a joint approach with the Dominican Republic. The Principals of CONALECHE await an indication of our willingness to collaboratively pursue this opportunity.

        *CFCS organizers have requested my intervention as a sounding board re Jamaica’s willingness to host 2013 meeting and/or to be reserve site for 2012 in lieu of Mexico (Professor Carlton Davis, U. Fl - and Dr. Alberto Beale, U. Puerto Rico).

        Acknowledgements

        The full cost of this visit ($237,762) was underwritten from the allocation under Object 22 – Travel Costs – of the 2010-11 Budget of the Jamaica Dairy Development Board and with the approval of the Cabinet Office. Enabling support was provided by the Ministry of Agriculture and Fisheries with the approval of the Permanent Secretary. I wish to record my appreciation to Mr. James Rawle, General Manager, Nestle Jamaica Ltd., who made arrangements with Nestle RD for facilitating my meetings with the principals of MEGALECHE and CONALECHE. Through him I also wish to convey my appreciation to Sr. Diego Blanco, Community and Public Relations Manager, Nestle RD, who undertook the relevant logistics including that of personal escort to the above-mentioned meetings. Finally I also acknowledge the intervention of Professor Carlton Davis, University of Florida and member of the Organizing Committee, through whose instrumentality my inadvertently late submission was accepted for presentation at the 46th Annual Meeting of the Caribbean Food Crops Society. Paul Jennings, PhD Chief Executive Officer July 19, 2010.