1. 1 The Restructuring of Third World Agro-Exports: Changing Production Relations in the Dominican Republic By Laura T. Raynolds

2. 2 Dominican Republic Background Historically a dependant agricultural export Economy Historically a dependant agricultural export Economy Traditional exports were mainly Sugar and then Coffee, Cocoa and tobacco Traditional exports were mainly Sugar and then Coffee, Cocoa and tobacco In the past exported mostly to Europe, now the U.S. In the past exported mostly to Europe, now the U.S.

3. 3 The values change From $504 million in 1979 (58%) From $504 million in 1979 (58%) To $310 million in 1989 (33%) To $310 million in 1989 (33%)

4. 4 Why did this happen? #1 Health concerns in Developed nations. #1 Health concerns in Developed nations. #2 Protectionary policies were placed in favor of domestic sugar producers. #2 Protectionary policies were placed in favor of domestic sugar producers. #3 Increased productive capacity and increased competition. #3 Increased productive capacity and increased competition. #4 Dominican Export Taxes #4 Dominican Export Taxes

5. 5 Dominican Response Governmental promotion of nontraditional exports Governmental promotion of nontraditional exports Definition of nontraditional: includes bananas, oranges, root crops and yucca. Definition of nontraditional: includes bananas, oranges, root crops and yucca.

6. 6 More Pressures on the Republic The Dominican Republic’s international debt, magnified by the crises The Dominican Republic’s international debt, magnified by the crises U.S. sugar quotas lowered U.S. sugar quotas lowered IMF/World Bank Policies (structural adjustment, etc.) IMF/World Bank Policies (structural adjustment, etc.)

7. 7 Export Promotion Policies Export Promotion Law (incentive payment, no import duty tax) Export Promotion Law (incentive payment, no import duty tax) Agro Industrial Law (income tax exoneration, import duty exemption) Agro Industrial Law (income tax exoneration, import duty exemption)

8. 8 State Subsidized Credit/Land Agricultural exporters given subsidized loans Agricultural exporters given subsidized loans U.S. and Dominican governments supplied $107 million for loan programs. U.S. and Dominican governments supplied $107 million for loan programs. Inexpensive rental made available for state actors. Inexpensive rental made available for state actors. Sugar Diversification Project Sugar Diversification Project

9. 9 Outcome Temporary Success and growth in income for nontraditionals Temporary Success and growth in income for nontraditionals Subsequent decline of market income for nontraditionals Subsequent decline of market income for nontraditionals

10. 10 Reasons for Decline Dominican State monetary resources were limited Dominican State monetary resources were limited 1989 Export Promotion Law no longer paid by Dominican gov. 1989 Export Promotion Law no longer paid by Dominican gov. Foreign and Domestic investors withdrew from market Foreign and Domestic investors withdrew from market

11. 11 Out Grower Model Large number of small Firms that invest in peasant farms Large number of small Firms that invest in peasant farms Firms/agribusinesses provide means and methods Firms/agribusinesses provide means and methods Peasants supply their own land and labor Peasants supply their own land and labor

12. 12 Benefits to Investors Firms control conditions of supply Firms control conditions of supply Access diverse landscapes Access diverse landscapes Limit risk Limit risk Do not undertake heavy labor requirement Do not undertake heavy labor requirement

13. 13 Oriental Vegetable Production Asian investment in vegetables Asian investment in vegetables Low levels of investment (low risk) Low levels of investment (low risk) Large amounts of peasant producers contracted per firm Large amounts of peasant producers contracted per firm The market eventually failed due to persistent FDA rejection of these exports The market eventually failed due to persistent FDA rejection of these exports

14. 14 Out grower Model Problems Small exporters are unable to comprehend import restrictions Small exporters are unable to comprehend import restrictions Short Term Profit driven firms are unconcerned with potential problems generated by production Short Term Profit driven firms are unconcerned with potential problems generated by production

15. 15 State Responsibility Failed to monitor Oriental vegetable situation correctly. Failed to monitor Oriental vegetable situation correctly. Consequences, lost food market, food was made vulnerable by pest problem Consequences, lost food market, food was made vulnerable by pest problem Did not adequately control national land resources and labor forces. Did not adequately control national land resources and labor forces.

16. 16 Pineapple Example 1% of nontraditional market share in 1980 to 14% in 1989 1% of nontraditional market share in 1980 to 14% in 1989 Dole and Chiquita use state land at a really low rate, attractive to businesses Dole and Chiquita use state land at a really low rate, attractive to businesses Joint venture with Dom. Gov. Joint venture with Dom. Gov.

17. 17 Common Themes Labor in Dom. Rep. is cheap Labor in Dom. Rep. is cheap Minimum wages set below inflation rate Minimum wages set below inflation rate Day laborers unprotected legally Day laborers unprotected legally No labor unions No labor unions No job security, even for women No job security, even for women

18. 18 Conclusions Third World States must establish favorable conditions to accumulation Third World States must establish favorable conditions to accumulation Productivity damaged in long term by short term foreign exchange Productivity damaged in long term by short term foreign exchange Protectionism contradiction Protectionism contradiction