unfermented cocoa to be low quality, and it is manufactured into cocoa butter. Thus, most Dominican cocoa sells at a discount on the New York market, which quotes prices for fermented cocoa beans. The US is the primary market for unfermented cocoa, and lack of fermentation limits interests by European chocolate makers in Dominican cocoa.

The Dominican Republic’s unfermented beans are known in the export market as _Sanchez,_ and fermented beans under the name _Hispaniola_ . Most cocoa is exported in 70kg bags as _Sanchez_ and _Hispaniola_ cocoa beans. Processed cocoa products accounted for about 10% the value of cocoa exports from 1998/99 to 2000/01. Processed cocoa exports include cocoa products, mainly cocoa butter (average share about 65% from 1996/7-2001/2), but also cocoa powder, cocoa liquor and chocolate candies.<sup>56</sup> In general, cocoa from the Dominican Republic does not have a great reputation for quality, and is not regarded as a major cocoa “origin” and does therefore not feature in many major chocolate manufacturers’ product formulas. While not a good quality cocoa, _Sanchez_ is considered a good, lower cost, cocoa for cocoa butter and powder production.

# **A Tradition of Unfermented Cocoa Beans**

Why is the Dominican Republic the only country in the world exporting unfermented cocoa beans? U.S. importers have a preference for Dominican _Sanchez_ cocoa for several reasons: a) it is cheaper than fermented cocoa, b) it can be used to produce cocoa butter and mixed with higher quality, more expensive cocoa beans (like mixing _Robusta_ and _Arabica_ coffees) to mass produce cocoa products for the U.S. market which is generally considered to dominated by chocolates of inferior quality, and c) the flavor from mixing fermented and unfermented cocoa beans is unique and desired in the U.S. market. Most U.S importers will not pay higher prices for better-quality fermented cocoa beans. But, why do Dominican cocoa producers continue to produce and market unfermented cocoa beans if they could receive higher prices for fermented cocoa beans? Dominican cocoa exports have long been concentrated in the hands of a few large commercial exporters who specifically cater to the U.S. market. These exporters have traditionally not provided price incentives for higher-quality fermented cocoa.

The Dominican industry now prefers to break with this tradition and export more fermented cocoa. Such a break will allow local producers and marketers to capture more value locally and will increase market access for Dominican cocoa. R rapid growth of exports by CONACADO, the producer cooperative that only exports _Hispaniola_ cocoa beans, indicates that when appropriate price incentives exist, Dominican cocoa producers are willing to practice improved post-harvest techniques.

Constraints to increased _Hispaniola_ production include the inertia of tradition, uncertainty about the profitability of fermentation, the need for better management and labor skill during harvest, the time cost of fermentation, and capital costs.

The share of fermented cocoa beans in total exports from the Dominican Republic is increasing over time; this share grew from 12% in 1998/99 to about 23% in 2001/2002 (see table IV.5). This growth reflects increased investment in processing and more quality-consciousness on the part of exporters. Roughly 60% of the producers in the CRMG survey produce _Sanchez_ cocoa; larger-scale producers are more likely to produce higher-quality _Hispaniola_ than the smaller-scale

> 56 The difference between cocoa beans and processed cocoa products explains some of the differences in data on cocoa exports.  Some figures only report cocoa beans and consider processed cocoa as a manufacturing product.

56