Dominican Republic and Haiti: Country Studies

Dominican Republic and Haiti: Country Studies
After the death of Trujillo, Dominican policy makers faced
the sensitive issue of how best to manage the dictator's economic
policy, which by stressing a one-crop economy represented
more of a drain on national finances than a catalyst to
development. These contradictions played themselves out
within the CEA, an entrenched, politicized, and inefficient parastatal.
The role of sugar changed markedly in the 1980s as external
conditions forced the national economy to diversify. Sugar
prices had reached unprecedented highs in 1975 and again in
1979. The international recession of the early 1980s, however,
pushed prices to their lowest level in forty years. Lower world
prices hurt the Dominican economy, but the reduction of sales
to the United States market, as a result of quota reductions that
began in 1981, was even more costly because of the preferential
price the United States paid under the quota system. The international
market continued to be unpromising in the late
1990s. The market was glutted by overproduction, caused principally
by European beet growers; major soft-drink manufacturers
also began to turn to high-fructose corn sweeteners and
away from cane sugar.
In the late 1980s, the CEA controlled 60 percent of the
nation's sugar output through the ownership of 75 percent of
the country's major sugar mills. These mills included the largest
and best equipped, the Haina mill. The CEA also owned
233,000 hectares of land. However, the state-owned enterprise
was operating at a loss and became so heavily indebted that it
began selling off land for industrial free zones and tourism
development projects. Its output fell below the production rate
of the two major privately owned companies, Casa Vicini and
the Central Romana Corporation.
The CEA's production has continued to decline steadily in
the 1990s, dropping from 311,000 tons in 1993 to 271,533 tons
in 1994 to 224,448 tons in 1995, to an all-time low of 196,826
tons in 1996. The long-term declining productivity of the CEA,
which was scheduled for privatization in 1999, was compensated
for by privately owned mills. For example, Central
Romana reported record production of 370,000 tons in 1993
and 344,700 tons in 1996 (only figures available). The country's
total sugar output in 1997, for example, was sufficient to
enable it to meet its United States preferential import quota
(see table 7, Appendix). This quota system, of which the
Dominican Republic is the largest beneficiary, provides a pref-
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