The Dominican Republic is a minor player in international coffee markets, with about 0.5-1% of total global coffee production/exports, and about 1.5-2% of global production/exports of coffees classified as “milds” (CODOCAFE, 2001). Dominican coffee is principally exported to North America followed by Europe. Between 1990-1999 the North American market received 60% of coffee exports. During this period European (Italy, Germany, Spain, Holland) countries accounted for 35% of exports. Italy is the primary consumer of Dominican coffee in Europe (about two-thirds of European exports), and by the late 1990s accounted for 20% of exports. Asia accounted for about 4% of exports, but the Japanese are increasing their purchase of Dominican coffee. Dominican exporters have recently increased their sales to other Caribbean countries. For example, Dominican Republic exports some of its coffee to neighboring Puerto Rico, both legally and illegally. In 2000, 63,000 hundredweight of roasted coffee officially passed to Puerto Rico and 2,500-4,000 hundredweight to Jamaica.<sup>33</sup>

|**Table III.6 Exports of Coffee by Destination, 1990-1999, In Thousands of Dollars- USD$000**|
|---|

|Years|NO|RTH|AMERIC|A||EUR|OPE|||ASI|A||T|OTAL|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||Sack<br>60Kg|%|US$|%|Sack<br>60Kg|%|US$|%|Sack<br>60Kg|%|US$|%|Sack<br>60Kg|US$|
|1990-99|189.3|60.3|25,390|61.4|87.8|35.3|12,249|34.1|12.3|4.4|1,850|4.5|289.3|39,488.60|

Source: Central Bank of Dominican Republic Most Dominican coffee is sold as mainstream coffees of not particularly high quality, and some international traders classify it as "substandard" (Buzzanell, 2002). Good-quality Dominican coffee is currently traded at a US$ 4.00 per hundredweight discount on the New York market, but quality penalties can be even higher. Quality problems are caused by poor post-harvest handling, mixing of different quality beans during marketing, unclear grading standards, and failure of the domestic market to reward quality. In the past, Europeans paid a premium for Dominican coffee from the regions of Barahona and Barahoruco, but quality and origin control problems have eliminated this premium. Even Barahona coffee, which is reasonably well known in gourmet trade, is no longer viewed as being of extraordinary high quality.

Several regions of the country, however, have potential for production of higher quality coffee. This potential can only be realized through better marketing standards, a more transparent marketing system and adoption of improved practices on the part of producers. Importers of Dominican coffee are typically looking for three things: a) strong acidity, b) coffee grown at high elevations, and c) distinct smell. The United States has a special niche market by virtue of the substantial numbers of Dominican émigrés. Less than 10% of Dominican exports go to specialty coffee markets, are certified organic, or are sold under Fair Trade arrangements. There is untapped potential to access these markets and current projects by Agencia Francesa de Desarollo (AFD), USAID<sup>34</sup> and the International Coffee Partners (ICP) are assisting Dominican producers access these markets. These niche markets are competitive<sup>35</sup> and other countries in Latin America and Caribbean are targeting them.

Fluctuations in yields prevent producers, producer associations, and even exporters from obtaining long-term fixed quantity-price contracts, and from purchasing forward pricing contracts

> 33 SOFRECO (2001), p.27.

> 34 The USAID Regional Specialty Coffee Project provides technical assistance to producer groups to access specialty markets.

> 35 Estimates put the world demand of certified organic coffee at less than 500,000 bags per year (EDE).

35