""

Required Report - public distribution

**Date:** 6/5/2003

**GAIN Report Number:** DR3014

DR3014

**Dominican Republic**

**Tobacco and Products**

**Annual**

**2003**

**Approved by:**

![](media/image1.wmf)David G. Salmon

#### U. S. Embassy Dominican Republic

**Prepared by:**

Carlos G. Suarez

**Report Highlights:**

Tobacco production is recuperating from an oversupply situation.
Production is returning to normal levels, old stocks are being
discarded/sold abroad and exports from Free Trade operations continue
strong. In CY 2002 the Dominican Republic was the forth largest U.S.
tobacco export market in the world and the leading high quality cigar
supplier to the United States exporting 188 million units.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Santo Domingo \[DR1\]

\[DR\]

####### Table of Contents

######## Executive Summary....................................................................................... 3

Production................................................................................................\...
4

Consumption...............................................................................................
6

Trade........................................................................................................
7

Stocks......................................................................................................10

Policy.......................................................................................................10

Marketing................................................................................................\...11

Statistical
Data.............................................................................................12

# Executive Summary

Preliminary data for 2001 and 2002 obtained from the Tobacco Institute
(INTABACO) show considerable lower values in acreage, and production
levels since their last report. The preliminary unofficial numbers for
2001 and 2002 obtained from INTABACO and confirmed by industry have been
adjusted and reduced to reflect these changes, mostly in dark air and
sun cured tobacco. The smaller acreage previously forecasted for 2002
was adjusted further to reflect the official planted acreage for 2002.
Industry sources indicate that after concluding the planting season for
2003 in December 2002 - January 2003, the preliminary estimates for 2003
anticipate a lower tobacco output below 10,000 MT. Flue cured tobacco is
no longer produced and burley production is minimal.

Dark air and sun dried tobacco apparent consumption increased above
prior estimates as a result of the government discarding old
deteriorated stocks kept in warehouses. This quantity is included as
part of the consumption in the tables. Some were discarded in 2001 and
additional quantities were disposed in 2002. Overall consumption of
tobacco, blonds and dark, is decreasing. This trend is not anticipated
to change in the near future, as no programs to develop the sector
appear to be in place.

The number of cigar factories operating in the country processing
tobacco into cigars continues to decline in 2002, down about thirty five
percent from the number operating during the cigar boom five years ago.
Preliminary numbers show the total output of hand made cigars in 2002 to
almost 190 million units, down from almost 240 million in 2001.
Cigarette consumption averaged about 4 billion units by the end of the
decade is also declining. Preliminary data for apparent consumption in
2001 remained stagnant when compared to the 3,350 million units consumed
in 2000. As inflation roared, preliminary data for 2002 show a reduction
of almost twenty percent when 2,770 million units were utilized. The
2001/2002 decline was due to the restrained of the economy and the
weakening of the peso. Although the two cigarette producers anticipated
some growth in 2002 as a result of new marketing strategies, the net
results have been a gradual reduction in market size.

The Dominican Republic continues to be one of the most important trading
partners with the United States in tobacco (raw for processing and
filler for cigar production inside and out of Free Trade Zone
operations). INTABACO reports indicate that in CY 2001, tobacco exports
from the Dominican Republic to the United States decreased due to the
limited availability. Exports in 2002 decreased further for the same
reason but received higher returns due to a better quality product
exported. Although this is not reported as part of the tables, the Free
Trade Zone operations show exports in 2001 of 5,900 MT (US\$ 78
million), increasing to 22,000 MT in 2002 (US\$ 62 million). Destination
in the latter year were mostly to the United States and Puerto Rico
(including about 19,500 MT of tobacco wastes to Puerto Rico).
Expectations for 2003, can not be anticipated as the local currency is
undergoing dramatic changes (20 percent devaluation in the last 60
days).

Industry contacts indicate that stocks of dark tobacco have been reduced
when compared to the last three years as a result of discarding old
deteriorated stocks carried over for years and to the exports of lower
quality tobacco stored.

# Production

According to the Dominican Tobacco Institute, INTABACO (the government
institution who regulates and controls production), most of the tobacco
produced in the Dominican Republic is dark air and sun cured. Within
this category there are three distinctive types produced: about twenty
percent is \"Piloto Cubano\" which is used for blending and as a source
of flavor and aroma, forty eight percent is \"Amarillo Parado\", used as
filler and the rest of the dark type is \"Chago Diaz\", also used as a
source of flavor and aroma. In addition there are some small quantities
of wrapper for cigars and burley for cigarette manufacture (flue-cured
is currently imported).

Dark air and sun cured production experienced astonishing growth in the
latter half of the nineties as a result of the cigar boom when tobacco
prices were really high and its availability was limited. This triggered
local producers to increase acreage to almost five-fold and production
levels continued expansion particularly after the cigar boom in 1998.
The results were enormous. Dry weight production surpassed 30,000 MT
which generated an oversupply situation for the local manufacturers and
the cigar producing operations inside and outside the Free Trade Zone
\[FTZ\]). In addition, it created major distortions at all levels of the
tobacco distribution channels. Government intervention through INTABACO
limited production areas, acreage and forced production to return to
normal levels.

Preliminary data for 2001 and 2002 obtained from INTABACO show
considerable lower values in acreage, and production levels since their
last report. The 2003 publication, covering 2002 data, it is not yet
available. The preliminary unofficial numbers for 2001 and 2002 obtained
from INTABACO and confirmed by industry have been adjusted and reduced
to reflect these changes. The smaller acreage previously forecasted for
2002 was further adjusted to reflect the official planted acreage for
2002. Industry sources indicate that after concluding the planting
season for 2003, the preliminary estimates for 2003 anticipate a lower
tobacco output below 10,000 MT.

In addition to the dark air and sun cured type tobacco, there are also
two types of "blond" tobacco produced in the Dominican Republic for
cigarette production. Flue-cured or Virginia and Burley tobacco have
been traditionally grown and used exclusively for cigarette manufacture
for local consumption. The elimination of import restrictions of this
type of product in recent years and the prevailing low international
tobacco prices for these types has made imports more attractive to
cigarette manufacturers. On the farmer's side, the increased input costs
have forced them totally out of competition with the Virginia or
flue-cured type. As a result, flue cured tobacco is no longer produced
(since 2000/2001). Production of Burley in 2001 and 2002 has been
reduced to less than 500 MT and acreage is not expected to increase in
the near future as cigarette consumption continues to decline.

Yields vary considerably depending on the farmer. The following table is
indicative of such yields but is not totally representative of the whole
production.

**Average Tobacco Yields by type (MT/HA)**

  ------------------------ --------------- --------------- ---------------
  **Type**                 **CY 2000**     **CY 2001**     **CY 2002**

  Virginia                 2.33            N/A             N/A

  Burley                   2.14            1.90            N/A

  "Amarillo Parado"        1.40            1.31            1.24

  "Chago Diaz"             1.61            1.54            1.45

  "Piloto Cubano"          1.50            1.56            1.59
  ------------------------ --------------- --------------- ---------------

Source: derived from INTABACO and industry.

Pest problems in dark and blond tobaccos are generally limited to blue
mold and aphids. In CY 2002, these problems did not have an adverse
impact on overall output, except on some plots of "Amarillo Parado".
This year the weather conditions have followed a normal pattern and
infections are not anticipated to gain grounds during CY 2003.

# Prices

Producers of burley tobacco and of the dark \"Piloto Cubano\" and
\"Chago Diaz\" receive good prices for their products as a result of the
steady demand for cigarettes and for good quality cigars. However,
prices in general appear to have increased in pesos, but the actual
reduction in the exchange rate has made tobacco less expensive. In the
case of \"Amarillo Parado,\" because of its lower quality, its price
continues to be considerably lower than the other types. Average on-farm
prices for the last four years are presented below:

**Average On‑Farm Price for Tobacco (RD\$)**

  -------------------------- ---------- ---------- ----------- ------------
  **Type**                   **CY       **CY       **CY 2002** **CY 2003
                             2000**     2001**                 4/**

  "Amarillo Parado"1/        400.00     400.00     450.00      700.00

  "Chago Diaz" 2/            1,350.00   1,300.00   1,500.00    1,200.00

  "Piloto Cubano" 2/         2,000.00   2,000.00   2,200.00    2,300.00

  Virginia 3/                N/A        N/A        N/A         N/A

  Burley 3/                  N/A        N/A        N/A         N/A

  Exchange rate RD\$ per     16.80      17.20      17\. 50     27.50 5/
  US\$                                                         
  -------------------------- ---------- ---------- ----------- ------------

1/ 60 Kg. bags 2/ 55 Kg. bags 3/ 50 Kg. bags 4/ Preliminary

5/ Currency devaluated over 20% in March-May 2003.

Source: INTABACO and Industry.

It is important to note that the peso has devaluated over twenty percent
in the last sixty days. This drop is not reflected in the prices yet.

Exporters or processors who account for the majority of consumption or
contract farmers to supply their production needs have traditionally
determined tobacco prices. At the present time, the tobacco stock levels
are coming down but the weakening of the peso will keep prices low. The
growers of burley tobacco and other dark air cured receive a contract
price from the cigarette and cigar manufacturing companies; perhaps this
may change in the coming months.

# Consumption

Consumption estimates for DASC (dark air and sun cured), derived from
INTABACO data, excludes plug tobacco (Andullos) and on‑farm consumption
since it is considered pre‑harvest losses. Dark air and sun dried
tobacco apparent consumption increased above prior estimates as a result
of the government discarding old deteriorated stocks kept in warehouses.
This quantity is included as part of the consumption in the tables. Some
were discarded in 2001 and additional quantities were disposed in 2002.
Overall consumption of tobacco, blonds and dark, is decreasing. This
trend is not anticipated to change in the near future, as no programs to
develop the sector appear to be in place.

There have been some changes in the number of cigar factories operating
in the country. According to industry sources, the number of hand made
cigar companies continues to decline to less than eighty-five in 2002,
down about thirty five percent from the number of factories operating
during the cigar boom five years ago. According to INTABACO's
preliminary numbers, the total output of hand made cigars has decreased
in 2002 to almost 190 million units, down from almost 240 million in
2001.

Cigarette consumption averaged about 4 billion units by the end of the
decade is declining. Preliminary data for apparent consumption in 2001
remained stagnant when compared to the 3350 million units consumed in
2000. As inflation roared, preliminary data for 2002 show a reduction of
almost twenty percent. when 2.77 million units were utilized. The
2001/2002 decline was due not to the already high taxes but due to the
restrained of the economy and the weakening of the peso. In the
aftermath of a privatization process of the Government owned Compania
Anonima Tabacalera, LA TABACALERA, the new privatized entity has not
gain any market share in almost two years of operation. Although the two
cigarette producers anticipated some growth in 2002 as a result of new
marketing strategies, the net results have been a gradual reduction in
market size. There is no anticipation of additional taxes applied to
tobacco products other than what was applied early in CY 2001 that drove
retail prices of cigarettes up and consumption down.

INTABACO does not maintain official statistics on consumption. However,
indicative consumption estimates are presented below reflecting the drop
in cigarettes/cigar consumption and a modest increase in consumption of
black tobacco for cigar production including stock discard (old tobacco
stored included as consumption). CY 2001 data was not available.

**Derived Consumption of Tobacco (MT dry)**

  ---------------------- ------------ ------------ ------------ ------------
  **Type**               **CY 1999**  **CY 2000**  **CY 2001**  **CY 2002**
                                                                3/

  Black Andullos 1/      1,186        1,250        N/A          880

  Black On-farm 1/       10           24           N/A          21

  Cigars and cigarettes  9,700        7,000        N/A          6,875
  2/                                                            
  ---------------------- ------------ ------------ ------------ ------------

1/ These are factored into pre‑harvest losses. For that reason, they are
not included in the PS&D table.

2/ Contracted price by the private sector. 3/ Preliminary estimates.

Source: INTABACO and Industry.

# Cigarette Wholesale Prices

Cigarette prices are presented for reference purposes:

**Wholesale Cigarette Prices (Cartons \[CT\]‑10 Packs, 20 Cigarettes
Each)**

+----------------+------------------+-------+-------+-------+-------+
| ###            | **Type**         | ####  |       |       |       |
|  Manufacturer/ |                  | Price |       |       |       |
|                |                  |  (RD\ |       |       |       |
| **Brand Name** |                  | $)/CT |       |       |       |
+----------------+------------------+-------+-------+-------+-------+
|                |                  | **    | **    | **    | **    |
|                |                  | April | April | April | April |
|                |                  | 2     | 2     | 2     | 2     |
|                |                  | 000** | 001** | 002** | 003** |
+----------------+------------------+-------+-------+-------+-------+
| E. Leon        |                  |       |       |       |       |
| Jimenez        |                  |       |       |       |       |
+----------------+------------------+-------+-------+-------+-------+
| Marlboro, reg. | f                | 1     | 1     | 1     | 2     |
| & light        | lue-cured/burley | 16.33 | 84.41 | 84.41 | 18.00 |
|                | filter           |       |       |       |       |
+----------------+------------------+-------+-------+-------+-------+
| Nacional, reg. | f                | 1     | 1     | 1     | 2     |
| & menthol      | lue-cured/burley | 02.74 | 72.86 | 72.86 | 08.00 |
|                | filter           |       |       |       |       |
+----------------+------------------+-------+-------+-------+-------+
| La Tabacalera  |                  |       |       |       |       |
+----------------+------------------+-------+-------+-------+-------+
| Montecarlo &   | f                | 99.72 | 1     | 1     | 1     |
| Belmont        | lue-cured/burley |       | 70.00 | 70.00 | 70.00 |
|                | filter           |       |       |       |       |
+----------------+------------------+-------+-------+-------+-------+
| Constanza      | f                | 99.72 | 1     | 1     | 1     |
| (menthol)      | lue-cured/burley |       | 70.00 | 70.00 | 70.00 |
|                | filter           |       |       |       |       |
+----------------+------------------+-------+-------+-------+-------+
| Hilton         | f                | 81.77 | 1     | 1     | 1     |
|                | lue-cured/burley |       | 21.99 | 20.99 | 20.00 |
|                | filter           |       |       |       |       |
+----------------+------------------+-------+-------+-------+-------+
| Palace         | f                | \-    | 1     | 1     | 1     |
|                | lue-cured/burley |       | 21.99 | 20.99 | 20.00 |
|                | filter           |       |       |       |       |
+----------------+------------------+-------+-------+-------+-------+
| Casino &       | Dark filter &    | 61.32 | 89.00 | 89.00 | 89.00 |
| Cremas         | dark non-filter  |       |       |       |       |
+----------------+------------------+-------+-------+-------+-------+

Source: Industry

The recent weakening of the peso has not been reflected on current
prices for above table in 2003.

# Trade

The Dominican Republic continues to be one of the most important trading
partners with the United States in tobacco (raw for processing and
filler for cigar production). INTABACO reports indicate that in CY 2001,
tobacco exports from the Dominican Republic to the United States
decreased due to the limited availability. Exports in 2002 decreased
further for the same reason but received higher returns due to a better
quality product exported. Although this is not reported as part of the
tables, the Free Trade Zone operations show exports in 2001 of 5,900 MT
(US\$ 78 million), increasing to 22,000 MT in 2002 (US\$ 62 million).
Destination in the latter year, were

mostly to the United States and Puerto Rico (including about 19,500 MT
of tobacco wastes to Puerto Rico). Expectations for 2003, can not be
anticipated at this time as the local currency is currently undergoing
dramatic changes (20 percent devaluation in the last 60 days).

Dominican cigar exports also decreased in total value but increased in
unit price. A similar situation occurred with unmanufactured tobacco.
The Dominican Republic imports tobacco from the U.S. to its Free Trade
Zones, classifies, further processes and re-exports a value added
product. U.S. exports to the Dominican Republic surpassed US\$ 85
million in CY 2001, positioning the Dominican Republic among the top
five largest importers of U.S. tobacco.

The United States supplies the vast majority of Dominican tobacco
imports. Imports of dark tobacco from the United States continued to
decrease during CY 2002 as a result of excessive inventories carried
over from 2000 and 2001. In spite of this, there is a continued demand
for processing high quality tobacco and wrapper. Most of the imports are
used as wrapper for classification, processing and cigar manufacture in
the Free Trade Zones (FTZ) and re‑exported to the United States as well
as to other countries. In CY 2002, the Dominican Republic imported over
2,000 MT of dark tobacco wrappers from the United States. Detailed
agricultural trade data for the last four years are included in the
following table:

###### Tobacco Imports from the United States 1/

+-----------+------+------+------+------+------+------+------+------+
|           | **CY |      | **CY |      | **CY |      | **CY |      |
|           | 19   |      | 20   |      | 20   |      | 2002 |      |
|           | 99** |      | 00** |      | 01** |      | 2/** |      |
+-----------+------+------+------+------+------+------+------+------+
|           | Quan | V    | Quan | V    | Quan | V    | Quan | V    |
|           | tity | alue | tity | alue | tity | alue | tity | alue |
|           | (MY) | (US  |      |      |      |      |      |      |
|           |      | \$M) | (MT) | (US  | (MT) | (US  | (MT) | (US  |
|           |      |      |      | \$M) |      | \$M) |      | \$M) |
+-----------+------+------+------+------+------+------+------+------+
| Wrapper   | 2    | 11   | 1    | 8    | 1    | 6    | N/A  | 43.7 |
|           | ,304 | 0.98 | ,710 | 0.54 | ,426 | 6.10 |      |      |
+-----------+------+------+------+------+------+------+------+------+
| Other     | 1    | 2    | 1    | 1    | 1    | 1    | N/A  | 37.2 |
| Wrapper   | ,437 | 4.21 | ,696 | 8.50 | ,211 | 9.00 |      |      |
+-----------+------+------+------+------+------+------+------+------+
| Binder &  | 1    | 1.10 | 1    | 1.76 | 8.0  | 0.02 | N/A  | 0.3  |
| Stems     | ,108 |      | ,900 |      |      |      |      |      |
+-----------+------+------+------+------+------+------+------+------+
| TOTAL     | 4    | 13   | 5    | 10   | 2    | 8    | N/A  | 81.2 |
|           | ,849 | 6.29 | ,306 | 0.80 | ,645 | 5.12 |      |      |
+-----------+------+------+------+------+------+------+------+------+

1/ Mostly free‑zone trade. 2/ Post estimates

Source: U.S. Dept. of Commerce.

The Dominican Export Promotion Center (CEDOPEX) statistics indicate that
about eighty percent of the national quantity exported moved to the
United States, while only ten percent of the tobacco exported by the
Free Trade Zone returned to the United States. Although post is not
using CEDOPEX data base as a major source of information, destinations
of the products is useful. Furthermore, CEDOPEX reported that the
Dominican Republic exported in 2001 about 7,293 MT of unmanufactured
tobacco leafs valued at US\$ 11.4 millions (not including other
categories such as: wrapper, wastes and others), while in 2002 these
quantities dropped to 3,773 MT valued at US\$ 5.8 million.

According to CEDOPEX, the major destinations of Dominican tobacco in
2002 were the United States (43%) and Spain (31%). The Free Trade Zone
operations on the other hand reported for 2002 a total of 922 MT of
tobacco exported. About half of that tobacco leaf (420 MT) returned to
the United States. In addition, a processed type (devained) of tobacco,
about 1,178 MT almost all

went to Puerto Rico and the United States (90%) with an export value of
US\$ 57 million. Overall exports in 2001 were higher in total value
(US\$ 72 millions).

A summary of the local trade data for the last four years follows:

**Dominican Tobacco / Cigar Exports**

  ------------- ---------- --------- ---------- -------- ---------- -------- ---------- --------
                **CY                 **CY                **CY                **CY       
                1999**               2000**              2001**              2002**     

                Quantity   Value     Quantity   Value    Quantity   Value    Quantity   Value
                (MT)       (US\$M)   (MT)       (U\$M)   (MT)       (U\$M)   (MT)       (U\$M)

  Cigars 1/     376.7 2/   243.8     204.4      83.8     256.3      67.5     188.6      138.6

  Tobacco (FTZ) 4,903      76.8      2,332      30.0     5,900      77.8     22,100     62.0

  Tobacco       14,435     40.4      7,304      11.2     8,300      12.1     4,200      6.4
  (national)                                                                            

  TOTAL 3/      19,338     361.0     9,636      125.0    4,522      157.4    26,300     207.0
  ------------- ---------- --------- ---------- -------- ---------- -------- ---------- --------

1/ Million units. Approximately 80 percent is Free Trade Zone
production.

2/ Independent report indicated this value did not include about 100
million machine manufactured.

3/ These totals are indicative since FTZ production is not part of the
national production.

Source: INTABACO & independent report.

According to INTABACO, in CY 2002 raw tobacco exports decreased while
its average unit price returned to higher levels. With a small CY 2003
harvest to come, export volumes of raw, processed and manufactured
tobacco are expected to remain low.

The two cigarette manufacturing companies in the Dominican Republic are
E. Leon Jimenez, S.A. and La Tabacalera, formerly Compania Anonima
Tabacalera. The first is a private company associated with Phillip
Morris, Inc. and is the leading cigarette manufacturing company,
accounting for over 85 percent of the cigarette market. The
LaTabacalera, owned partly by the GODR and now with a new
Spanish/Dominican partner (privatized), controls the rest. The major
ingredients in cigarette manufacturers are: flue-cured or Virginia and
Burley. Currently, there is no flue-cured tobacco produced locally so
most of the imports in 2002 (470 MT) came from Brazil (98%) and minimal
quantities from Venezuela and Turkey.

Changes in the market place, such as health issues, higher taxes for
cigarettes and the weakening of the peso, have reduced the market size
and less cigarettes are being consumed. Changes in the marketing
strategies as the new company consolidates its position in the market
have not shown any results. Both companies import most of their inputs
including filter tow, cigarette paper and packing materials from the
United States.

As part of the special arrangements with their U. S. partners, the
brands they produce under license are manufactured exclusively for local
consumption. Very small quantities of other cigarettes are exported.
GODR sources indicate that about 3 MT of non‑FTZ cigarettes (dark
tobacco) were exported last year, the majority of which went to the EU.

# Stocks

Industry contacts indicate that stocks of dark tobacco have been reduced
when compared to the last three years as a result of discarding old
deteriorated stocks carried over for years and to the exports of lower
quality tobacco stored. In addition, the remaining stocks are of the
better quality tobacco, which require prolonged storage periods (the
aging process) needed to produce high quality cigars.

The overall tobacco stock levels have decreased in CY 2001 and 2002 as a
result of large volumes of poor quality tobacco sold to middle east
countries at a low unit price and to some warehouse cleaning of poor and
questionable quality tobacco, including some stocks of poor quality
tobacco purchased by the government to assist small farmers several
years ago.

# Policy

The Secretariat of Agriculture, through INTABACO, sells certified seed
to small tobacco farmers, germinated planting material for re‑planting
and some inputs. It also issues phytosanitary certificates for exports
and keeps track of the sectors statistics. Inputs are no longer
subsidized. According to the Agriculture Secretariat Operating Plan,
about one percent of the Agricultural Credit Bank's budget (US\$52
million) was allocated to the tobacco sector.

Subsidies: occasionally, tobacco farmers get into financial difficulties
and request government assistance. The central government, through the
Agricultural Bank makes the purchase. This tobacco is often stored for
long periods of time and sold at market value.

# 

# Tariffs

The selective tax on locally produced cigarettes is set at twenty three
percent. In addition, there is a 12 percent VAT, which brings the total
tax to thirty five percent. Tobacco and tobacco products imports are
subject to the following tariffs (se table in the next page):

  ----------------------------------- -----------------------------------
  **Description**                     **Tariff Rate**

  Basic Tariff**:**                   

  For raw tobacco                     15 percent of C+F value

  For semi-processed tobacco          20 percent of C+F value

  For tobacco wastes                  15 percent of C+F value

  For cigars and cigarettes           30 percent of C+F value

  For all other types                 30 percent of C+F value

  Other applicable taxes**:**         

  Selective surcharge                 30 percent of C+F value

  Value Added Tax                     12 percent of C+F value
  ----------------------------------- -----------------------------------

Law 346 assesses a 5 percent *ad valorem* tax on all material used for
re‑export.

Under the World Trade Organization (WTO) agreement, the Dominican
Republic bound its maximum tariff for most agricultural commodities at
40 percent.

# Marketing

In CY 2002, the marketing channels for most of the dark air and sun
cured tobacco are as follows: out of total production, producers or
producer associations sold about 25% to brokers, 15% to independent
packers, 25% to the exporters and 25% to the Cigar Factories in and
outside Free Trade Zones. The brokers in turn sold about 10% to the
cigar factories and the rest to the exporters. Exporters handled about
65% of the production. Some companies involved in the cigar manufacture
contract producers at set prices. The buyer finances the whole operation
charging no interest for the advances made to the producer during the
four-five month period.

In the case of burley tobacco and when flue-cured is produced, the
marketing channels are different. There are only two cigarette
producers. The manufacturers contract tobacco producers for desired
quantities. The manufacturers generally finance the whole operation in
order to guarantee the required product. As an alternative, and
depending on local and international prices, the manufacturers source
additional requirements from foreign markets as it is currently the case
with flue-cured.

Homogenized sheets are neither manufactured nor used in the Dominican
cigarette or cigar manufacture. The growth of the cigar manufacturing
industry in the free zone areas and the specialized personnel available
at acceptable costs have been important elements in the expansion of
U.S. tobacco exports to the Dominican Republic. However, future market
opportunities for U.S. exporters of dark tobacco will hinge on the
success or failure of maintaining good quality tobacco production,
processing and specialized labor at acceptable wage levels.

# Statistical Data

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