Expansion of sustainable cocoa production.

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Expansion of sustainable cocoa production.

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Country

Dominican Republic

Sector

Food and Beverage

Sub Sector

Food and Agriculture

Indicative Return

5% - 10% (in ROI)

Investment Timeframe

Medium Term (5–10 years)

Market Size

> USD 1 billion

Average Ticket Size (USD)

< USD 500,000

Direct Impact

Indirect Impact

Business Model Description

Commercial initiatives in areas such as establishment of nurseries, production of organic fertilizers, provision of agronomic services.

Expected Impact

Sustainable production practices will increase the cocoa sector's productivity, resilience and participation in national and international markets.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

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Country

Dominican Republic

Region

Cibao Norte
Cibao Sur
Cibao Nordeste
Cibao Noroeste
Valdesia
El Valle
Enriquillo
Yuma
Higuamo
Ozama

Learn more

Sector

Food and Beverage

Development need
Developing countries have a high dependence on food imports, affecting domestic supply, discouraging agricultural activities and increasing food insecurity (1). By February 2023, 1.5 million people in the DR were in acute food insecurity crisis or emergency, with 54.1% of households in rural areas experiencing a high prevalence of moderate or severe food insecurity (2, 3).

Policy priority
The National Development Strategy (END) establishes in its objective 3.5.3 to increase the productivity, competitiveness and environmental and financial sustainability of agricultural production chains, in order to contribute to food security, take advantage of export potential and generate employment and income for the rural population (4).

Gender inequalities and marginalization issues
Only 25% of women own land in the country. Rural women work at a disadvantage compared to men, with greater difficulty in accessing land, credit, participation in decision-making, specialized technical training and access to agricultural inputs and other government services (5).

Investment opportunities introduction
In the year 2022, the annual growth rate of agricultural economic activities represented 5.0% in their contributions to the Gross Domestic Product. This sector represents opportunities for export and food production whose contribution to GDP in 2022 was 16.18% (6, 7).

Key bottlenecks introduction
Lack of innovation in the food and beverage sector is low to keep creating new products and adapt to new risks. Increased R&D will create a more sustainable and resilient business sector in the face of climate change shocks (8).

Sub Sector

Food and Agriculture

Development need
agriculture is a sector that faces climate risks and is important for the Dominican economy. It supplies 85% of domestic food consumption. In 2017, 2 hurricanes caused an estimated US $23.02 million in losses (9). There is a need to improve agricultural productivity through innovation, product transformation and use of better production practices (10).

Policy priority
The Dominican State has the political priority of promoting the development of food systems and achieving food sovereignty and security. Among these are the Strategic Agricultural Sector Plan and the National Plan for Food Sovereignty and Security (11, 12).

Gender inequalities and marginalization issues
Only 8% of women are engaged in agriculture, livestock, forestry and fishing activities. While 70% of the workforce in agriculture is male. In addition, workers in this sector are below the average wages paid in the Dominican economy earning in 2019 an estimated US $1.47 per hour (2).

Investment opportunities introduction
The Dominican Republic is recognized for its leadership in the production and export of food and beverages such as cigars, cocoa, rum, organic bananas, avocados, peppers, among others (13). Eighteen percent of the country has arable land representing an approximate of 877 thousand hectares, of which approximately 10% has irrigation systems (14, 15).

Key bottlenecks introduction
The challenges facing the agricultural sector are related to low crop productivity, increasing returns on investment, market instability, small landholdings, land ownership and poor plantation management. In addition, limited access to commercial credit financing for the sector (16) .

Industry

Agricultural Products

Investment Opportunity Area

Expansion of sustainable cocoa production.

Business Model

Commercial initiatives in areas such as establishment of nurseries, production of organic fertilizers, provision of agronomic services.

Market Size and Environment

Market Size (USD)

> USD 1 billion

CAGR

5% - 10%

The global cocoa beans market is forecast to register a CAGR of 7.1% between 2023 - 2028. This market growth is justified by the increasing demand for this product by the confectionery, food & beverage, pharmaceutical and cosmetics industries. Countries such as Switzerland, Austria, the United States and Germany are the largest importers of this product (18).

Indicative Return

ROI

5% - 10%

Considering the financial indicators of the sector cocoa , the return on investment in cocoa cultivation is 0.05%, and in cocoa processing 4.83% (19). Likewise, according to the CSI Market tool, the return on investment in the food processing sector averages 8.09% (20).

Investment Timeframe

Timeframe

Medium Term (5–10 years)

The minimum investment for the development and maintenance of a single cocoa farm over a 3-year period is approximately US$ 280 (21). In addition, the cost of production at current cocoa sector prices is approximately US$ 6,000 over a 10-year period per hectare (22).

Ticket Size

Average Ticket Size (USD)

< USD 500,000

Market Risks & Scale Obstacles

Market - Volatile

The high volatility of international cocoa prices is very pronounced and over a short period of time. The lack of the use of tools to mitigate trade risks hinders stable economic growth (23).

Business - Supply Chain Constraints

This sector requires investments in infrastructure, financing and inputs for maintenance and harvesting of production. This represents 60% of agricultural producers who have limitations to achieve quality products and meet the demand (24, 25).

Climate change risks such as increased storms, droughts and floods affect agricultural production in the Dominican Republic causing high economic losses (26).

Sustainable Development Need

The lack of knowledge of good practices for the safe and quality production of cocoa lowers the productivity and competitiveness of the sector.

Low public investment in agricultural communities and low levels of access to public services diminish the quality of life of the population, causing them to move to more urban areas.

Gender & Marginalisation

Lack of programs aimed at women and youth with special interest in the cocoa family.

Women producers represent only 16.3% of the population of agricultural producers in the Dominican Republic.

Financial inclusion of women in the agricultural sector is low. Only 9% of financing loans for agricultural production are granted to women.

Expected Development Outcome

To increase agricultural technical capabilities for safe and quality national cocoa production.

Increase public and private investment to increase accessibility to services (education, infrastructure, health, among others) to improve the quality of life in rural areas.

Gender & Marginalisation

Establish programs aimed specifically at young people and women in the cocoa and cocoa products sector.

Increase the level of women's participation in agricultural activities.

Increased financial inclusion of women in the agricultural sector and financing facilities.

Primary SDGs addressed

2 - Zero Hunger

2.4.1 Proportion of agricultural area under productive and sustainable agriculture

Current Value

Organic agriculture accounts for 4% of the total agricultural land in the Dominican Republic (28)

Target Value

Increased competitiveness and profitability of the agricultural sector (29).

8 - Decent Work and Economic Growth

8.1.1 Annual growth rate of real GDP per capita

Current Value

In 2022, the annual per capita GDP growth rate was 3.8% (30) and the average wages in the agricultural sector are lower compared to other productive sectors. In 2019, the hourly income was RD$72.5 (31).

Target Value

Formal employment rate in the agricultural sector from 12.8% to 14.7% (29).

17 - Partnerships For the Goals

17.11.1 Developing countries’ and least developed countries’ share of global exports

Current Value

By 2022, the Dominican Republic's share of global exports of goods was 0.1%, with an annual growth rate of 5%. In the year 2021, exports of services represented 0.13%, with an annual growth rate of 5% (32).

Target Value

Percentage share of agricultural activities in the national and international demand for products and services from 2.6% to 2.9% (29).

Secondary SDGs addressed

1 - No Poverty

Directly impacted stakeholders

People

More than 40,000 cocoa producers.

Gender inequality and/or marginalization

According to the 2015 agricultural census, 318 thousand people planted agricultural products. Of this population, only 10% are women.

Planet

The agroforestry system in cocoa production benefits the planet in carbon sequestration, biodiversity conservation, soil enrichment and protection, and improved water and air quality.

Corporates

Cocoa producing and processing companies.

Public sector

Ministry of Agriculture, Ministry of Environment, Banco Agrícola, Comisión Nacional de Cacao.

Indirectly impacted stakeholders

People

Rural people engaged in agricultural production.

Outcome Risks

Increased exports of cocoa products and derivatives, neglecting the local market.

Gender inequality and/or marginalization risk: Increased productivity in the cocoa sector of individuals and companies with greater technical capacity and not benefiting smaller farmers.

Impact Risks

Increased cocoa prices resulting in an uncompetitive supply compared to other markets.

The use of non-agroforestry monoculture techniques affecting soil quality.

Impact Classification

B—Benefit Stakeholders

What

Increasing cocoa production capacity in a sustainable manner.

Who

Cocoa producers and industries in the Dominican Republic with the lowest level of productivity.

Risk

Only a small number of producers and industries in the cocoa sector practice sustainable agriculture.

Contribution

Development of better practices for sustainable production in the country.

Impact Thesis

Sustainable production practices will increase the cocoa sector's productivity, resilience and participation in national and international markets.

Policy Environment

National Development Strategy 2030 creates the basic conditions that favor the synergy between public and private actions for the achievement of the Long-Term Vision of the Nation and the Objectives and Goals of said Strategy (4).

Strategic Plan for the Agricultural Sector (12).

National Food Sovereignty and Security Plan to reduce food insecurity (11).

National Cocoa Plan (33).

Financial Environment

Financial incentives: Foreign investors, whether natural or legal persons, have the right to remit abroad, in freely convertible currencies, without the need for prior authorization (35).

Fiscal incentives: suspension of import taxes on the entry of products that are later re-exported or used as raw material for export products and tax exemptions for the importation of machinery and vehicles for agricultural and livestock use (36, 37).

Other incentives: Residence Permits for Investment Program, through an agreement with the General Directorate of Migration, having as a prerequisite the Certificate of Registration of Foreign Direct Investment (35).

Regulatory Environment

Land tenure and land reform laws, as well as plant and animal health (34).

Private Sector

Cocoa producers and processors such as ASOPROCON, CONACADO, COOPCANOR, COOPROAGRO, OKO Caribe, among others.

Government

Ministry of Agriculture, Comisión Nacional de Cacao, IIBI, IDIAF, CONIAF

Multilaterals

WFP, FAO, UNDP, IICA, AECI

Non-Profit

CEDAF, JAD, Caribbean Export