Dominican Republic - Livestock Development Project

RESTRICTED Report No. PA-71a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTElRNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION LIVESTOCK DEVELOPMENT PROJECT DOMINICAN REPUBLIC April 6, 1971 Agriculture Projects Department  CURRENCY EQUIVALENTS US$1 = Peso 1 WEIGHTS AND MEASURES (Metric System) 1 kilogram (kg) = 2.20 pounds 1,000 kg - 1 metric ton (m ton)= 0.98 long ton 1,000 millimeters (mm) = 39.37 inches 1 kilometer (km) = 0.62 mile 1 hectare (ha) = 2.47 acres 1 square kilometer = 100 ha = 0.39 square mile = 247.11 acres 1 liter (1) = 0.26 gallon GLOSSARY OF ABBREVIATIONS RD$ Dominican Peso GDP G Gross Domestic Prodcct DIA Department of International Agreements of the Central Bank FIDE Economic Development Investment Fund T.PD Livestock Project Division DIT = Department of Industrial Technology  DOMINICAN REPUBLIC LIVESTOCK DEVELOPMENT PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS .......................... i-ii I. INTRODUCTION ..................................... 1 II. BACKGROUND ....................................... 1 A. General ................................. 1 B. Agriculture ................................. 2 General ...... ................ 2 The Livestock Sub-sector ............... 2 Land Tenure ................ 3 C. Animal Hlealth ....... ............... 3 D. Livestock Services ..... .............. 4 E. Agricultural Credit Services ................ 4 F. Livestock Policies ..... ............. 6 III. THE PROJECT ...................................... 7 A. Description ....... .......................... 7 B. Project Areas and Detailed Features ......... 8 C. Cost Estimiates ...... ........................ 9 D. Proposed Financing ..... ..................... 10 E. Organization and Management .............. ... 10 Leniding Channels ................... .... 10 Technical Services ................. .... 11 F. Lending Operations ..... ..................... 13 Ranch Development Subloans .... 13 Working Capital Loans ............... ... 13 Terms and Conditions ............... .... 13 Lending to Ultimate Beneficiaries ...... 13 G. Disbursement ................................ 14 H. Auditing .................................... 15 I. Procurement ..... ... .. . ......., 15 IV. MARKET PRICES AND PRODUCERS' BENEFITS .......... .. 15 A. Market and Prices ...... ..................... 15 The Cattle and Beef Mlarket ...... ........ 15 The Milt Market ........... .. ........... 16 B. Producers' Benefits and Revenue Generation .. 17 This report was prepared by Messrs. F. van Gigch, D. B. Argyle, R. Khouri and W. Struben. Annex 8 was prepared by the Trade Studies and Export Projections Division, Economics Department. ' 1\  -2- Page No. V. ECONOMIC BENEFITS AND JUSTIFICATIONS .... ......... 18 VI. RECOMMENDATIONS .................................19 AisNEXES 1. The Livestock Sub-Sector 2. Banking System and Credit 3. Development Projections 400-ha Beef Breeding/Fattening Ranch, Eastern Region Table 1 - On-ranch Investment Projections Table 2 - Herd Development Projections Table 3 - Projection of Sales, Operating Expenses, and Operating Income Table 4 - Financial Projections 100-ha Dairy/Beef Fattening Ranch, Northern Region and Cibao Table 5 - On-ranch Investment Projections Table 6 - Herd Development Projections Table 7 - Projection of Sales, Operating Expenses, and Operating Income Tabile 8 - Financial PrQjections .504iaD-eeftbalry TRancli, Niorthern Region Table 9 - On-ranch Investment Projections Table 10- Herd Development Projections Table 11- Projection of Sales, Operating Expenses, and Operating Income Table 12- Financial Projections 4. Project Cost by Major Investment Categories and Foreign Exchange Component 5. Management and Technical Services Table 1 - Cost Projections Appendix 1 - Organization Chart Appendix 2 - Duties, Responsibilities, and Authority of the Project Director Appendix 3 - Duties, Responsibilities, and Authority of the Livestock Assistant to DIA Director 6. Projected Source and Application of Funds - FIDE's Livestock Project Account 7. Estimated Schedule of Quarterly Disbursements of a US$5.0 Million Credit 8. I4arket Prospects in the World Beef and Veal Economy  9. Financial and Economic Rates of Return Table 1 - Financial Rates of Return Table 2 - Economic Rate of Return Appendix 1 - Assumptions Relating to the Economic Rate of Return Calculation MAP Project Areas   DOMINICAN REPUBLIC LIVESTOCK DEVELOPMENT PROJECT SUMMARY AND CONCLUSIONS i. The Government of the Dominican Republic has applied for a US$5.0 million IDA Credit to provide long-term funds for a livestock development program. The objective of this Project would be to increase the supply of beef and milk by increasing the productivity of livestock resources from their existing low levels. The low calving rates, high mortality and slow rate of weight gains encountered on most ranches are due primarily to defective nutrition and, in general, unsatisfactory herd management methods. On the few well-managed ranches in the country that have the proper facil- ities and technical knowledge, production levels are high. The Project, therefore, would supply participating ranchers with credit for on-ranch investment and technical assistance to permit them to adopt modern cattle production techniques. The resulting increase in production would assist the Dominican Republic to continue to export beef in addition to satisfying rising domestic demand. Milk production would supply existing dairy pro- cessing plants, (principally for the manufacture of cheese) and future plants which will produce condensed milk from imported milk products and local whole milk. Thus, the Project would help the country improve its balance of payments, and, by developing local expertise in livestock pro- duction and its financing would set the stage for further livestock devel- opment. ii. The Project would consist principally of improving about 260 beef and dairy ranches in the Eastern, Northern and Cibao regions through credit and technical services. Project funds would be channeled to ranches through the overall banking system by the Central Bank's Economic Development Invest- ment Fund (FIDE). On-ranch development subloans would be granted for land clearing and preparation, pasture establishment and renovation, fencing, watering points, cattle handling facilities, machinery and equipment, and for purchase of cattle. Such loans would be for seven to 10 years, with grace periods of two to four years, at a 9% per annum interest rate. Participating credit institutions would also finance short-term loans for working capital requirements from their own resources. iii. Participating ranchers would receive assistance from technicians of participating credit institutions, supported by a newly created Livestock Project Division (LPD) which would be established within the Department of International Agreements (DIA) of the Central Bank. LPD would be headed, during the disbursement period of the Project, by a qualified Project Direc- tor, who would be assisted by a local staff. However, the Central Bank recognizes that at this stage it is unlikely to find locally a man with suf- ficient experience to fill adequately from the beginning of the Project the requirements of Project Director. Thus, to secure sufficient expertise for the Project during the start-up period and allow time to build up local ex- pertise, the Central Bank would employ during the first three years of the  - ii - Project a suitable technician, with experience in areas of other Bank/IDA countries ecologically similar to the Dominican Republic, as Livestock As- sistant to the DIA Director. Technicians of participating credit institu- tions would be approved by the LPD and these, as well as the LPD staff, would be trained on the recommendations of the Livestock Assistant to the DIA Director. iv. Project cost, including incremental working capital, is estimated at about US$9.0 million. The proposed IDA credit of US$5.0 million would finance tile foreign exchange component of about US$2.4 million and US$2.6 million of local costs. The contributions of IDA, the Central Bank, participating credit institutions, and ranchers would be 55%, 15%, 13% and 17% percent respectively. v. Goods required for the Project would be procured through existing commercial channels and there is enough active competition to ensure an adequate supply and satisfactory service. Goods that would be imported are usually available from a number of countries. Duties and taxes on goods, that would be required for the Project, are low. Vi. Expected benefits to sub-borrowers and the overall economy are satisfactory. The rate of return of the Project to the economy is estimated at 21%o while the financial rate of return to participating ranchers would range between 21% and 23%. Sub-borrowers' cash balances after debt service would be adequate to encourage their participation. After about 10 years, the Project would be expected to generate annually about 2,300 m ton of additional beef, and 15.9 million liters of milk, equivalent respectively to 8% and 6% of current national production. It would also generate an annual flow of about 8,000 breeding heifers to build up the national herd. vii. The Project is suitable for an IDA Credit of US$5.0 million. The Credit would be made to the Government which would bear the foreign exchange risk. The Government would on-lend the proceeds of the Credit to the Cen- tral Bank, the Project's administering agency, for a term of 50 years, in- cluding a 10-year grace period, at 3.5% interest per annum. The Central Bank would utilize these funds for Project purposes for a period of 15 years. Surplus funds arising from repayment of subloans and not required to service the subsidiary loan would be used for further agricultural development lend- ing.  DOMINICAN REPUBLIC LIVESTOCK DEVELOPMENT PROJECT I. INTRODUCTION 1.01 The Government of the Dominican Republic has applied, through its Central Bank, for an IDA Credit to provide long-term funds for a beef and dairy development project. This Project, which would be the first stage of a long-range livestock development program, would consist principally of improving about 260 beef ranches and dairy farms in the Eastern, Northern and Cibao regions (Map) through credit and technical services. The objec- tive would be to utilize a part of the country's substantial livestock potential for increasing the supply of beef and milk. This would help ensure sufficient output of meat to take advantage of recently developed export opportunities and meet rising domestic needs. The increased output of milk would be absorbed by existing cheese plants. The Project would help the country to improve the balance of payments, and, by developing local expert- ise in livestock production and its financing as well as disseminating tech- nical information, it would set the stage for further livestock development. 1.02 A Bank Group Economic Mission to the Dominican Republic in January 1969 identified the possibilities of a livestock credit project. At the request of the Government, Mr. J. Fransen of IDA visited the country in June and September of 1969 to assist a team of Central Bank technicians in the preparation of the Project. The completed application was received in April 1970 and the appraisal mission, composed of Messrs. F. van Gigch, D. B. Argyle, R. Khouri and W. Struben, visited the Dominican Republic in September 1970. This appraisal report is based on the mission's findings. II. BACKGROUND A. General 2 2.01 The Dominican Republic has an area of about 48,000 km occupying the eastern part of Hispanola, the second largest island in the West Indies. It is bounded on the west by Haiti and has shores on both the Atlantic Ocean and the Caribbean Sea. The population, 70% of which is rural, is growing at about 3.0% annually, and was estimated at about 4.0 million in 1969. 2.02 After a decrease of almost 14% in the Gross Domestic Product (GDP) following the revolution of 1965, GDP has increased at a satisfactory annual rate since 1968 and in 1970 was about US$300 per capita. Prices have been remarkably stable in recent years. 2.03 The Dominican Republic has suffered fr'-m a chronic gap in the balance of payments since the early 1960's. Unfortunately, the market  - 2 - outlook for the Dominican Republic's traditional exports is not expected to improve in the short run, nor can it reasonably be expected that import requirements will substantially decrease in the inmediate future. Con- sequently, the development of non-traditional exports, such as beef (para. 4.03) and nickel (development assisted by an IBRD loan made in November 1969) and import substitution of commodities, such as dairy products (para. 4.06), are of high priority. The Dominican Republic has suitable resources and market opportunities to achieve these objectives. B. Agriculture General 2.04 In 1968, agriculture in the Dominican Republic provided about one- fourth of GDP, employed over 60% of the labor force, and generated about 90% of foreign exchange earnings. However, agricultural growth has been limited during the last decade. Wlile this was due mostly to political unrest and bad weather, it was also a result of limited technical knowledge, financial assistance, and Government services. Between 1957 and 1969, agriculture as a whole, crops, and livestock production grew by only 11%, 7% and 21%, respectively. Simultaneously, because of rapid population growth (para. 2.01), agricultural production per capita decreased by 25%. 2.05 Of the Dominican Republic's 4.8 million ha of land, 45% is in farms of which 80% is actually developed. The grazing area is about 0.8 million ha, two thirds of which is in planted grasses (Guinea, Pangola). Part of the undeveloped land could be developed into productive pasture land with modern techniques and financial assistance. Leading agricultural products are sugar, coffee, cocoa and tobacco, representing together about 85% of all exports, and cassava, plantain, beans, peanuts, tropical fruits and livestock products, principally for the domestic market. In 1968 the Dominican Republic imported about US$30 million equivalent of agricultural products, principally wheat (US$8 million), dairy products (US$7 million), and vegetable oils (US$2 million). The Livestock Sub-sector (Annex 1) 2.06 About one-quarter of 1969's agricultural output was livestock products: some US$46 million equivalent out of a total of US$191 million. Cattle production consisted of about 30,000 m ton of beef and 250 million liters of milk. According to the last census (1960), the cattle population was 1 million animals; it is presently estimated at 1.1 million head. In- adequate technology, excessive slaughter during the 1965 civil war, drought conditions in 1968, and shortages of development finance have contributed to this slow growth. 2.97 A large proportion of the cattle population is of criollo stock, descendants of those introduced during the early days of colonization. Tnese are less productive than improved breeds of cattle in terms of weight  - 3 - gains and milk output, but hardy and resistant to the local diseases. According to the 1960 census less than 3% of the 147,300 cows milked were of pure improved dairy breeds (Holsteins, Brown Swiss or Jerseys) and about 16% were upgraded by crossing to Holstein or Brown Swiss bulls. During the same year the national beef herd was composed of about 75% criollos, 22% upgraded by crossing to Zebu, Brown Swiss and Charolais bulls, and 3% pure beef breeds. These proportions would not have changed much since then. 2.08 Cattle productivity on most ranches is low due to poor manage- ment, low levels of nutrition and disease. Usually beef herds have effective calving rates of 40% to 60% and it takes steers three to four years to reach slaughter weight of 400 kg liveweight. On a few properties where imanagement, nutrition and disease control are at the level envisaged for Project participants, calving rates are up to 80%, steers reach 400 kg liveweight at two and a half years and the number of cattle per ha is above average. On dairy ranches annual milk production is usually below 1,000 liters per cow and calf mortality is 15% to 20%. A few more efficient ranchers have raised annual milk production per cow to about 2,000 liters and reduced calf losses to 6-7%. There is, therefore, considerable scope to improve ranch productivity. The main requirements are for development finance for improving pastures, fencing and water supplies, and for purchase of better cattle and machinery, plus technical guidance. On many ranches there are also uncleared or partly cleared areas suitable for development. Land Tenure 2.09 Most of the land in the Dominican Republic is owned privately under freehold title. The rest is held under notarized documents that show ownership but require a legal ruling to convert to a freehold title. The subsequent registration is time consuming and subject to expensive fees. Most commercial ranches have freehold titles except in the Eastern region (Map), where it is estimated that only half the ranchers have them (para. 3.04). The Agricultural Bank is prepared to lend to property owners without a freehold title but with a legal ruling on the ownership. The com- mercial banks will also sometimes lend without a freehold title, provided other security is adequate. In general, lack of freehold title would not preclude the opportunity of substantial lending for livestock development. C. Animal Health 2.1U The country i.S free of foot and moutlh disease but brucellosis is a problem. Other contagious diseases occastonally flare up but all canl be prevented by modern veterinary control measures. However, low calving rates an<l poor productive performances are mainly a function of poor managemenit rather thian disease and] could be reduced by improving the nutritional stattus of animals (para 2.08). The Government is currently manufacturinig brucellosis vaccine (Strain 19) and licenses the importation of all veterinary vaccines and drugs. These are exempt from import dtuty and are readily available at competitive prices.  - 4 - D. Livestock Services 2.11 The University of Santo Domingo and the Pedro Henriquez Urena University have veterinary and agricultural facilities which are both less tihan 10 years old. The two universities annually graduate a total of about 30 veterinarians and 60 agriculturists, all with1 some degree of formal trainiing in animal production. This output should be more than sufficient to mleet domestic requirements once the present siortage is relieved. Pedro henriquez Urena University is also planning the introduction of a five-year degree curriculum in aninmal husbandry. About 20 university graduates have already received advanced training in animal production abroad and 100 others are currently doing so, (mainly under AID programs). These should be returning within the next three years to seek employment in the country, and will alleviate thie current shortage of skilled technicians. 2.12 Agricultural extension services are provided by a number of organizations but the Under Secretariat of Livestock is primarily respon- sible for these services to the cattle industry. However, with only 36 veterinarians and 10 animal production technicians operating out of head- quarters in Santo Domingo and seven field offices, the Under Secretariat is hard-pressed and can offer only limited coverage of the country. The Under Secretariat of Livestock is also responsible for livestock research but ihas not given significant attention to livestock production and pasture miainagement, primarily because of shortages in qualified staff and operating funds. One of the universities has started screening tropical grasses and legumes and hopes to extend the study to grazing trials. The other has just acquired a farm and is currently finalizing a program of teaching and re- search in animal production. Government and university officials are convinced of the importance of applied research, and both groups would welcome financial and technical assistance in conducting studies on the introduction of legumes into grass swards and the management of grazing animals and pastures. Information on such subjects is lacking and is sorely needed for development of the cattle industry. E. Agricultural Credit Services (Annex 2) 2.13 Agricultural and livestock credit is provided by both public and private credit institutions. The banking system in the Dominican Republic is well developed with branches throughout the country. 2.14 Aggregate credit to the private sector increased 78%, from RD$ 134 million to RD$ 239 million, between December 1966 and June 1970. Over this same period, credit to agriculture, excluding livestock, increased 36%, from RD$ 46.2 million to RD$ 62.9 million, while credit to livestock increased 60%, from RD$ 7.8 million to RD$ 12.5 million. 2.15 The Agricultural Bank provides about 70% of the livestock credit. The maia source of funds has been a loan by the Inter-American Development  - 5 - Bank (IDB) for US$6 million effective in 1963. Subloans under the program are mainly for short to medium term development, with emphasis on the purchase of steers and breeding stock. Repayment is usually over two to five years, at an effective interest rate between 8% and 9% per annum. There has been no limit on the size of loans, but the average size of RD$ 2,300 reflects the Agricultural Bank's traditional role, which has been to finance small- and medium-size farmers and ranchers. Lending does not incorporate a whole farm approach, and, because of the large number of small loans, technical assistance is limited. The IDB funds have been fully drawn and there is now a waiting period of some months before new approved subloans can be funded from repayments. Government is, therefore, requesting a further IDB loan and envisages that livestock subloans under it would have a ceiling of US$10,000 equivalent in the proposed IDA project areas and would cater mainly to the small- to medium-size ranches. 2.16 Livestock loans from the commercial banks are mainly short term, with interest rates of 10% to 12% per annum. An exception has been a Chase Manhattan Bank livestock program in which RD$ 1.4 million is out- standing as medium-term sub-loans, made at an interest rate of 8% to 9% per annum. This program has been mainly financed from a US$0.9 million USAID loan to the Chase Manhattan Bank. With no further AID assistance likely, future subloans under this program will be limited to rollover funds. The commercial banks are aware of the need for long-term livestock lending but as this would result in liquidity problems and is less profit- able than short-term loans, they are not prepared to use their own funds for this purpose. 2.17 In 1966, to assist productive enterprises in the country, the Central Bank established a Department of International Agreement (DIA), whose prime role was to administer a newly created Economic Development Investment Fund (FIDE). The FIDE is financed by IDB, AID and the Central Bank on approximately equal shares and it has provided about US$18 million for long-term development loans, mainly to industry. Funds are channeled through the general banking system, with the sub-borrower receiving long- term loans at 9% interest, inclusive of the technical assistance provided during the development period. Loan requests forwarded by participating banks are reviewed by DIA's staff and a final decision is made by the FIDE's Loan Committee which includes the Governor and Manager of the Central Bank. A few agriculture and livestock loans have been made from the FIDE but neither the Central Bank nor most participating banks have had specialized livestock staff or looked upon the FIDE as an important source of livestock lending. However, the Central Bank considers that FIDE should now broaden its lending to provide development funds for commercial ranchers. They see this as fitting in with their general concept of aiding commercial-sized enterprises able to utilize capital and technical knowl- edge effectively and as opening up new lending channels to an important subsector. Thc proposed IDA Project would provide the necessary funds and withi thieir past experience in FIDE's other operations the participating banks should have sufficient confidence to appoint livestock specialists and to make long-term livestock loans.  F. Livestock Policies 2.18 The Government is aware of thie need to nake a concerted effort to accelerate agricultural growth and is trying to create the appropriate legal aud institutional framework. This is reflected in the Agricultural and Livestock Development Law of December 1969, whlich is the most complete enunciation of official agricultural development objectives yet produced in the Dominican Republic. Tils law exempts from import duties most agri- cultural inpupts and provides a uax lkoliday on t4e first RD$ 7,500 income fromi agriculture as well as on all agricultural income from producers owning agricultural assets of up to RD$ 75,000. 2.19 Under the Industrial Incentive Law of 1968, industries wishing to establish themselves in the Dominican Republic may request, from the Depart- mtent of Industrial Technology (DIT) of the Ministry of Industry, the classi- lLcation of "Industries of high priority". This classification exempts beiieficiaries from most import duties on equipment and on raw materials wizen ttie domestic supply of the latter is considered insufficient. Two dairy processing industries 1/ for condensed, evaporated and powdered milk have been granited classification B , which exempts them from nearly all import duties 2/. They are now in the process of establishment and will be able to use either imported dairy products or local whole milk. If these new plants utilize a reasonable quantity of local whole milk, they would develop local livestock resources and save foreign exchange, while, by (r)mLbiniug local milk with cheap imported dairy products, producing a reason- abLy priced end product. There are few guidelines to assist DIT to determine if local supplies are insufficient and discussions with DIT indicated that it wjould be hard pressed to find the necessary local expertise to make such evaluations. The Ministry of Industry indicated that it would welcome tech- nical and financial assistance in evaluating the market and economic impact of the new dairy firms after a reasonable start-up period and in designing criteria to guide dairy imports policy (para. 4.06). 2.20 The Government is interested in encouraging exports of beef, "aiiile ensuring an adequate supply to the local market at reasonable prices. However, the scarcity of cattle relative to demand of the domestic and ex- port beef markets has caused cattle and beef prices to increase rapidly (para. 4.01). To limit further rises thie Government has imposed maximum cattle .nd beef prices to protect consumer prices and to prevent the country frovmi pricing itself out of the export market. These prices are set at a I/ One will be a Nestle's group factory which is expected to be operational by May 1971. The other is Dominican-owned and its completion is not certain. Both are located in the Cibao region. 2/ The aggregate of different charges levied on non-exempt imported dairy products is US$0.32 per kg, plus 55% ad valorem.  - 7 - reasonably high level 1/ and would be only a minor disincentive to invest- ment in livestock development. Moreover, they are not strictly enforced and producers are receiving about 10% above the legal limit. It would be politically difficult for the Government to remove the present pricing policy, despite its limited effectiveness. Because the beef exporting companies also supply part of the local market the Government requires that there be a relationship between their export and their local sales. When deliveries to the local market have fallen too low in relation to exports, the Government has on several occasions suspended exports for short periods until the relationship has been restored. The Government believes that the only way to achieve an adequate supply of beef, for both the domestic and export markets at reasonable prices, is to encourage cattle development and it considers the proposed Project as a most important instrument in bring- ing this about. III. THE PROJECT A. Description 3.01 The Project consists of the development of about 100 beef breeding/fattening ranches in the Eastern region, 120 dairy/beef fattening ranches in the Northern region and Cibao, and 40 beef/dairy ranches in the Northern region (Annex 3). Participating producers would receive long-term subloans and technical assistance with which to introduce more productive pastures, suitable ranch facilities and equipment, and superior herd manage- ment techniques to raise calving percentages, reduce mortality and increase herd productivity in terms of the beef and milk output. In addition, short- term loans would be provided to sub-borrowers during the development period to purchase steers to be fattened on surplus feed available during herd buildup, and to cover incremental operating expenses. 3.02 The Project would also provide overseas training for three or four local technicians for a total of about 12 man-months. There is a pro- vision for pasture field trials which would be subcontracted to the Ministry of Agriculture and the universities and be performed under the supervision of the Project Director Cpara 3.16). Finally, the Project would finance the hiiring of consultants for a total of about six man-months to assess the economic and market impacts of the dairy processing plants that are being established in the Dominican Republic (para 4.06). 1/ The maximum legal price for steers is US$0.41 per kg liveweight. This compares favorably with prices per kg prevailing in other exporting coun- tries, e.g. Argentina and Uruguay, US$0.25; Paraguay, US$0.19; Guate- mala, US$0.35; Costa Rica, US$0.36; Australia and New Zealand, US$0.30.  - 8 - B. Project Areas and Detailed Features 3.03 The Project would comprise three Project areas: Eastern, Northern and Cibao (Map). Together, they include most of the comwnmercial cattle ranches except those in the specialized ae:d well-developed fluid zlilk regions around Santo Domingo. All areas are tropical buit there is coasiderable variation in the amount and inciden-ce of rainfall and in th-e type of enter- prise. 3.04 The Easteni area, wtiich includes tlhe provinces of El Seibo and La Altagracia and parts of San Pedro De Macoris and La Romana, has an annual rainfall of 1,500 to 2,00)0 nw), rmost of it in the summer. Nornally, the dry season is only three month,s and, although longer droughts that severely curtail production occasionally occur, tihey rarely result in loss of mature animals. The area is used mainly for beef production and ranches are larger than in the other two Project areas. A 400 ha beef breedinig/fatten- ing ra