Briefing Note: Trade Liberalization in the Carebbian Region and IMF Impacts in Haiti and the Dominican Republic

To understand the consequences of International Monetary Fund (IMF) policies on peasants in Haiti and the Dominican Republic, it is necessary to bear in mind that this international financial institution does not only lend money. For several decades, its financing has often been conditional on adjustment measures and economic reforms that can profoundly transform the way a country produces, trades and consumes its food.

In the Caribbean, these policies have promoted, among other things, trade liberalization, the reduction of customs protections, control of public spending and greater openness to international markets. For the IMF, loans and adjustment policies are generally justified in the name of efficiency and economic growth. But for peasants, the consequences can be very different when the forced opening of markets exposes their production to deeply unequal competition with imported products, often coming from industrialized and heavily subsidized agricultural systems. While agribusiness and large transnational corporations expand their markets and profits, millions of peasants see prices fall, their livelihoods disappear and their dependence increase. These policies weaken peasant agriculture and undermine peoples’ food sovereignty.

Haiti and the Dominican Republic allow us to understand this phenomenon in concrete terms.

From the mid-1990s onwards, Haiti entered a period of profound economic reforms, accompanied by the International Monetary Fund (IMF), the World Bank and other international financiers. These reforms were implemented in a country where the majority of farmers are small-scale producers, with little capital, limited access to credit and deeply insufficient rural infrastructure.

Before the reforms, Haitian agriculture was relatively protected from external competition. In the early 1980s, customs duties on numerous food products reached between 40 and 50%. Rice, a staple food for the population, was subject to a 50% customs duty. There were also licenses, quotas and other restrictions limiting imports.

After the return to constitutional order in 1994, the Haitian government launched an economic recovery programme accompanied by a structural adjustment strategy. The IMF describes this period as a phase of “sweeping trade liberalization”, meaning far-reaching trade liberalization.

The change was extremely rapid. In November 1994, the government reduced the customs duty on rice from 50% to 10%. Then, as part of the tariff reform adopted in January-February 1995, it reduced it again, to 3%. The remaining restrictions on agricultural imports were also eliminated, and customs duties on numerous food products fell from 40–50% to levels between 0 and 5%.

Although the IMF states that the reduction of the rice tariff from 50% to 3% had been decided by the Haitian authorities before the IMF agreement was signed in March 1995, its programme was part of a broader period of economic adjustment that continued for several years.

Imagine a small-scale rice farmer in the Artibonite Valley. Before the reform, when a sack of rice arrived from abroad, it had to pay a significant tax to enter the Haitian market. This protection gave local producers greater possibilities to sell their rice. After the reform, this protection practically disappeared.

Rice imported from the United States began entering much more easily and at a lower price. Yet the Haitian producer did not work with the same means as the US producer: access to credit, infrastructure, mechanization, irrigation, storage and public support were not comparable.

The problem then became very concrete: if the price of rice falls, consumers can pay less, but the peasant can also earn much less from the same harvest. That is exactly what happened.

Between 1986–1989 and 1997–1999, Haitian paddy rice production fell from approximately 180,000 tonnes to 105,000 tonnes per year. At the same time, imports increased rapidly and represented approximately two-thirds of national consumption by the end of the 1990s.

The relative price of rice also declined. Between 1994 and 1999, the general price index increased by around 125%, while the domestic price of rice increased by only around 65%. In relative terms, rice therefore became approximately 25% cheaper.

For a family buying rice, this could be a relief. For a peasant family dependent on selling its rice, it could become a major problem.

When the selling price falls but the cost of transport, seeds, fertilizers, water or credit remains high, the producer’s margin quickly disappears.

And when production no longer makes it possible to make a living, peasants may be forced to seek another source of income, sell part of their land or gradually abandon agriculture.

The liberalization of the economy did not stop in 1995. In October 1996, the IMF approved a three-year programme for Haiti under the Enhanced Structural Adjustment Facility (ESAF), amounting to 91.1 million Special Drawing Rights, or approximately 131 million US dollars at the time.

The programme sought to continue the economic reforms initiated after 1994. It included, among other things, the restructuring of the public administration, reform of the tax system, reform of the financial sector, further trade reforms and the privatization of several public enterprises.

For peasant agriculture, this period is important because it means that the transformation of the Haitian economy was no longer based only on reducing customs tariffs. The very role of the State was now being progressively transformed. The State was expected to spend less in certain areas, intervene less directly in the economy and leave more space for the private sector and the market. Yet Haitian agriculture precisely needed major public investments: irrigation, roads, credit, agricultural research, seeds, storage, access to markets and support services.

At the beginning of the 2000s, Haiti entered a new period of economic difficulties. The government implemented a new reform programme monitored by the IMF in 2003-2004.

One of the most visible measures concerned fuel. To eliminate subsidies on petroleum products and increase public revenues, the government implemented a new pricing policy. Between January and February 2003, fuel prices increased by approximately 130%.

For a peasant, fuel is not a secondary expense. Fuel is needed to transport crops to market, operate certain machines, pump water or simply travel between the village, the farm and places of sale.

When fuel increases by 130%, the cost of bringing a harvest to market also increases. The peasant must then choose between selling at a higher price, risking losing customers, or selling at the same price and absorbing the increase in costs themselves.

By opening its market widely to imported food products while its own agriculture continued to face a lack of infrastructure, credit and investment, Haiti progressively increased its dependence on the international market.

The situation became especially visible during the global food price crisis of 2007-2008. When international prices for rice and other foods soared, Haiti could not simply rely on its own production to protect its population: decades of policies that had weakened peasant production had left the country heavily dependent on imports.

This is the paradox of food dependency: when international prices are low, imports may seem like a cheap and advantageous option. But when prices soar, that same dependency becomes a major vulnerability and the entire population suffers the consequences. This turns food dependency into a question of food sovereignty: who produces food, who controls food systems and who decides about the food of peoples.

For Haitian peasant organizations, the IMF reforms of the 1990s and those that followed therefore raise a fundamental question: what is the use of an economy capable of importing cheaper food if it progressively destroys the conditions that allow peasants to produce that same food?

In the current context of the agricultural sector, the country has a National Family Farming Plan (2019-2028), which seeks to coordinate public policies to integrate small-scale rural producers into food sovereignty and food security, promoting their inclusion through state procurement and an adjustment of marketing channels in response to competition from open markets.

However, the Dominican Republic faces a delicate adjustment in its agricultural sector, marked by international pressure to open local markets to sensitive products, such as rice, under the DR-CAFTA agreement; the official position in favour of tariff protection; the decline in foreign labour; and a rebound in imports.

Against this particular context, we present a historical overview of these economic adjustments. At the beginning of the 2000s, the country went through a serious banking and financial crisis. Gross public debt rose from 27% of GDP in 2002 to 56.8% in 2003. The government then entered into an IMF programme aimed at restoring macroeconomic stability and reducing debt.

To achieve this objective, the programme required the government to ensure that state revenues exceeded expenditures, even before accounting for debt interest payments. This surplus was to progressively reach 3.5% of GDP, approximately twice the average level of the 1990s. To achieve this, the government had to reduce its deficit and limit public spending.

In 2004, the adjustment measures represented approximately 2.5% of GDP: around 0.5% of GDP came from fiscal measures and 2% from reductions in public spending. The measures included, among other things, an increase in certain taxes, a 2% surcharge on imports and restrictions on public spending.

To understand what this means for rural areas, we need to look beyond the macroeconomic figures.

The phrase “less room to support agriculture” in the Dominican Republic sums up one of the most complex macroeconomic and international realities facing the countryside in 2026. Although the government reports record production figures for basic crops such as rice and cassava, the State’s room for manoeuvre to directly subsidize, protect and finance producers has narrowed due to the combination of trade, fiscal and labour pressures. The tariff protection the country once had to defend local production, particularly rice, has practically disappeared. Under the timetable of the agreement with the United States, import tariffs reached zero. This leaves the government with very little legal or commercial room to block cheaper imports or directly subsidize national production without violating international agreements.

Dominican agriculture is facing a decisive moment due to two parallel phenomena, a labour crisis and the cost of mechanization.

When the State has to reduce spending to restore its finances, it has less room to finance infrastructure, public services and agricultural support policies. Opening markets to competition does not have the same consequences for a small-scale producer when they have a State capable of supporting them as when they must face this competition with few public resources.

CAFTA-DR, the free trade agreement between the United States, the Dominican Republic and the countries of Central America, progressively reduced tariff protections on numerous agricultural products.

Rice, beans, pork, poultry, dairy products and other sensitive foods were incorporated into tariff-rate quota mechanisms and the progressive reduction of customs duties. The agreement provides, among other things, safeguard mechanisms for certain agricultural products, including pork, chicken thighs, beans and different categories of rice.

For Dominican producers, the problem is that they do not compete on the same terms as large US farms, which have much greater access to capital, infrastructure, technology and public support.

Market opening can therefore create competition that appears “free” on paper, but in reality is far from taking place on equal terms.

This issue is particularly important because land is already distributed very unequally in the Dominican Republic. According to World Bank data1, the majority of farmers are small-scale producers: 72% work on farms of less than 3.13 hectares. However, together they control only 28% of cultivated land. Agriculture represented around 11% of GDP and 15% of employment at the time, with production concentrated mainly in rice and sugar cane.

Under these conditions, simply asking small-scale producers to be “more competitive” against imports is not enough. They are not starting from the same starting line.

The problem is also visible in the changing weight of agriculture in the economy. According to FAO data2, its contribution to GDP fell from approximately 11% in 1993 to 6% in 2013.

Under the IMF programme, the government was required to reform the electricity system and reduce the costs of subsidies. In 2004, the electricity subsidy represented approximately 0.9% of GDP. The programme provided, among other things, for tariff reform and a reduction in subsidies that benefited wealthier consumers to a greater extent.

But this adjustment ultimately affects peasants, who need electricity for irrigation, water pumping, storage, food preservation, product processing and rural economic activities.

Thus, a macroeconomic policy that appears to affect only public finances can have very concrete effects on food systems. Public infrastructure is also agricultural infrastructure.

The Dominican case therefore reveals several problems that reinforce one another. On the one hand, the country emerges from a financial crisis with a programme of austerity and fiscal consolidation. On the other, it progressively opens its agricultural market to much stronger international competition. At the same time, the majority of farmers work on small plots and a significant share of the land remains concentrated. The result is not simply a question of “productivity”. It is a question of economic power.

• Who owns the land? In the country, 7 large families, high-ranking military officers and foreign investors.

• Who can access credit? Civil servants on shifts and those who are willing to mortgage their land; the financing requirements are very demanding and binding for the peasantry.

• Who can invest in technologies? Those who have the resources; it is very expensive.

• Who can store their production? It is a business controlled by intermediaries and large investors (agribusiness).

• Who can withstand a fall in prices for several months? Those who have guarantees from the national banking system and those who bring products into the country without taxes, such as Panama, which introduces 103 permanent products into the Dominican Republic.

• Who benefits from infrastructure? Large consortia that, over the last 20 years, have created, together with successive governments, well-known foreign investors backed by government officials and Dominican companies in order to harm producers and guarantee large exports. (They call it clusters and also use state enterprises for these purposes, such as IAD – Dominican Agrarian Institute, CEA – State Sugar Council, among others.)

And above all: who decides what the country produces to feed its population? It is decided by large foreign investors and those who manage free trade agreements. These questions are at the heart of social justice and food sovereignty.

Rice is also an interesting example in the Dominican Republic because the country made different decisions from Haiti.

Even today, rice remains one of the country’s main agricultural productions. Dominican authorities have maintained production support programmes, particularly the Pignoración Programme, as well as certain restrictions on imports. According to recent trade data, the Dominican Republic therefore maintains significant domestic rice production. This shows that public policies can make a difference.

In 2024, however, the country imported approximately 192,352 tonnes of rice, worth 172.4 million US dollars. The United States alone accounted for approximately 55,104 tonnes of these imports.

Rice therefore remains a sector where two visions confront each other: that of a market more open to imports and that of a policy aimed at maintaining domestic production capable of feeding the population.

For peasant movements, the debate goes far beyond the question of price. It is about whether the country wants to preserve the productive capacity of its peasants.

These two countries do not have exactly the same history. But their comparison allows us to understand something essential. The policies of international financial institutions should not be analysed solely on the basis of their stated objectives: economic stability, debt reduction, economic growth, market efficiency or lower prices. We must also look at what happens to the people who produce food.

In Haiti, the liberalization of the rice market helped reduce prices for consumers while national production declined: approximately 180,000 tonnes of paddy rice in 1986-89 compared with 105,000 tonnes in 1997-99, while imports occupied an increasingly important place in the country’s food supply.

In the Dominican Republic, the budget adjustment that took place after the 2003 banking crisis was combined with increasing trade openness. In 2004, the adjustment programme represented approximately 2.5% of GDP, of which 2% corresponded to reductions in public spending, while the country was preparing its integration into CAFTA-DR.

In both cases, small-scale producers face a central question: how can peasants remain peasants when economic policies prioritize international competition over the protection and development of local food systems?