Producing a kilo of rice in the United States costs between 2.00 and 4.00 pesos less than in the DR

The main concern of rice producers in the Dominican Republic, regarding the duty-free entry of this cereal into the country from the United States, is that production in that country is much more competitive due to the incentives and support they receive from the U.S. government, the technology and mechanized processes they use, as well as the volumes of hectares they have planted.

Producing a kilo of rice in the Dominican Republic costs between RD$22 and RD$24 pesos, depending on the farm, type of rice, fertilizers used, etc.

However, the estimated rice production cost per kilo in the United States is 0.34 US cents, equivalent to approximately RD$20.83 Dominican pesos.

In other words, the difference in production cost per kilo between both countries is around 2.00 to 4.00 pesos, which at a low volume might not represent a significant difference, taking into account that for that rice to reach the country, it must pay for freight, insurance, and intermediation, but it could be significant at large volumes.

Another important difference that reduces competitiveness is production volumes.

85% of Dominican producers cultivate between 90 and 100 tareas of rice, while in the United States, the majority of producers cultivate over 700 hectares, equivalent to about 11,130 tareas.

The elimination of tariffs on rice from the United States is due to the fact that in 2005 the Free Trade Agreement between the Dominican Republic, Central America, and the United States (DR-CAFTA) came into effect, where it was agreed that in 20 years, rice from the United States would enter the Dominican Republic with a 0% tariff; that period expired on January 1, 2025.

However, the Government decided to protect local production for one more year with Decree 693-24, applying a new tariff regime to imported rice and only keeping a quota of 23,300 tons duty-free.

However, this decree was contradictory to what was agreed upon in 2005 in the DR-CAFTA, and pressure from the United States made the entry of its rice into the country duty-free imminent, which is why the Dominican Government silently issued decree 635-26, which basically repeals the one from 2024.