The typical Dominican meal is up to 200% above cost to producers
SANTO DOMINGO. The products that permit putting the typical Dominican Republic meal on the table- rice, beans and chicken (also called the “bandera” or flag” – can be as much as 200% more expensive to the consumer than the price that the producer sold the products for on the farm.
The chain of intermediaries can pass from the producer or importer to the wholesaler, from this person to the retailer, and finally to the consumer, as occurs with beans, garlic and onions, or can begin with the producer, pass through a processor, and continue through the stages of wholesaler – retailer – client, as with rice and poultry.
The profit margin between the price which the rice farmer sells his product (RD$8.00/pound), and that paid by the consumer (at least RD$24/pound) is among the highest (200%). The rice farmer sells the rice in husks (paddy rice) to the Miller, who has to process it in order to take off the husks, cuticles and polish the rice kernels.
The margins on beans is at least 100%, since the farmers are selling at RD$20 and RD$22/pound and they reach consumers at a minimum of RD$40/pound. Equally, the country is not self-sufficient in beans, and the greatest part of consumption must be imported.
Live chickens on the farm are sold at RD$31/pound and they arrive fresh at a price 116% greater, at RD$65/pound, to the consumer, after going through the processors, where they are plucked and cleaned, and where the feet, liver, heart and gizzard are removed and the bird loses up to 20% of its weight.
“The miller takes a good slice”
Rice farmers sell the pound of rice – paddy rice– at some RD$8. 00 to the rice mills. Producing rice costs some RD$7.00/pound and for this to be beneficial, according to the president of the Association of Rice Producers of the Northeast (Aprano), Cesar Espaillat, they need to sell the rice at RD$8.7/pound.
The rice growers says that after processing the grain, the pound of rice goes from those RD$8/pound to some RD$17/pound, since the 125 pound bag is sold in the factory at RD$2150 and RD$2200.
“The rice processor takes a good slice of this, because we as small and medium rice growers find it difficult to get involved in the sale of white rice, because this is a market that is very, very defined between the suppliers that now have the market well in hand,” said the president of Aprano.
The media coordinator of the National Federation of Merchants and Businessmen (Fenacerd), Ricardo Rosario, explained that the rice processor has a structure which reaches the warehouses and these earn between RD$100 and R $150 for each 125 pound bag, considering that these are tight profit margins at this stage of the chain. Nevertheless Rosario made it clear that if these are well known brands, they can earn even more.
In the supermarkets, the 50 pound bag of select rice from well-known factories costs between RD$1199 and RD$1325, so that the pound costs the consumer between RD$24 and RD$26. If the rice is premium, the price goes up, and is placed between RD$1340 and RD$1384 – between RD$27 and RD$28/pound.
Loan sharks “take advantage” of bean farmers
According to estimates of the bean farmers from the San Juan Valley, in order to harvest a pound of this legume, it will cost between RD$32 and RD$38. The president of the Farm Producers Association of San Juan de la Maguana, Milciades Espinoza, explained that they invest RD$4774 for each tarea they plant and that each tarea produces between 125 and 150 pounds.
When the harvest approaches, the Ministry of Agriculture sets the prices which the farmers should follow, but this year they have not done this, and current prices have been set by the merchants that have financed the harvest, said Espinoza. The farmer says that the state banks barely finance 15% of the cost of the harvest, so that many have to go to the loan sharks and commit in this way their harvest.
Because of this the farmers that have brought in their crops are selling the pound at RD$20 and RD$22, far below production costs, since in order for it to be profitable they should sell at a minimum of RD$40/pound.
“The prices vary, but at the moment that the bean harvest begins here, the merchants, who are the ones that control the prices, take advantage; they begin to buy kilos, and when the official prices are announced, the beans are already in the hands of the merchants,” complained Espinoza.
Ricardo Rosario says that “the only thing” that halts the increase in the prices of beans and any other product is the timely supply. In spite of the fact that the Dominican Republic is not self-sufficient in these legumes, conflicts within the sector have obstructed imports.
Rosario complains that the import permits are given to just a few persons. The Appointment of Tariff Contingencies of DR – CAFTA for the year 2014, granted by the Commission for Farm Imports (from the Ministry of Agriculture) gives permits to 41 companies or persons to bring beans from the United States.
The company most benefited with the assignment to bring beans with zero tariffs is the Agro – Commercial Import, SRL, which has ties to the Administrative Minister of the Presidency, José Ramon Peralta, as is confirmed by his biographical profile on the webpage of the Presidency.
Agro – Commercial Import, SRL had an assignment in 2014 to bring 3093 tons of beans to the DR. They are followed by Granos Nacionales, S.A., (a company that belongs to Manuel Castillo Pimentel), with 2222 tons; Casa Chepe, SRL, with 1628 tons; and Importadora del Sur, SRL, also with 1628 tons. The other 37 importers have minor assignments of less than 1000 tons and even 25 of them are allowed to import less than 100 tons.
Ricardo Rosario says that now the warehouses are buying beans from the importers at RD$45 a pound which they sell to wholesalers at RD$48/pound.
In the supermarkets, the pound of red beans is between RD$55 and RD$57, the pound of pinto beans is at RD$40 and the José Beta variety sells for RD$60/pound.
After processing poultry loses up to 20% of its weight
The production cost of a pound of chicken on the farms of the Cibao is approximately RD$28. So, to raise a live chicken costs the farmers some RD$126 – a unit has between 4 and 4 ½ pounds during cool months such as this one – and they sell them at approximately RD$140 or RD$31/pound.
The president of the Association of the Chicken Farmers of the North (Asopollon), José Lopez, said that the average production cost per pound without interest or depreciation of the coops is some RD$25.50, but reaches RD$28 with these other values factored in, although he made it clear that the real cost varies depending on the farmer and his efficiency.
The producer says that after killing the bird in the processors the price for a pound reaches RD$45.00.
For the final consumer in the cities, the price of a pound of whole chicken is some RD$65.00.
February 16, 2015
Category: DR News |