Jul. 29, 2020
With vast natural resources, a strategic location straddling the equator, a diverse climate, and varied topography, agriculture and livestock have historically been two of the major engines of economic growth in Colombia. According to the National Administrative Department of Statistics (DANE), agriculture, food, and fisheries represented 20.1% of total exports, 9% of GDP, and 20% of employment in 2019.
Traditionally known for its coffee, exotic fruits, livestock, palm oil, and bananas, the country is now looking to leverage its natural ability to grow crops all year-round and produce diverse harvests in order to assume a bigger role as a global food supplier. Colombia's agriculture sector faces a number of challenges, though a lack of rainfall is not of them; the country receives the most rain of any country in Latin America and ranks 10th globally for precipitation. That partly explains why the United Nations Food and Agriculture Organization (FAO) has identified Colombia as one of seven countries with the potential to become the world's pantry and serve the ever-increasing demand for food, which is projected to increase by more than 50% over the next decade.
Although total cultivated land in Colombia expanded by 7% on average in the five years leading up to 2019, it still produces only a small percentage of what it is capable of. The government has identified 40 million ha of land suitable for food production, but only 7.6 million ha are currently being cultivated. Harnessing this untapped potential will allow Colombia to boost economic growth, especially in underdeveloped areas, and produce enough food to supply a significant portion of the world's needs.
Over the next 15 years, the agriculture sector in Colombia is expected to grow 2.5% annually with an increase of 44% in land area, and with that, the demand for water will increase at an accelerated rate. However, though water availability in Colombia is six time that of the global average, certain areas only see a tenth of the average levels. To address this challenge, the government has established the Safe Use of Wastewater in Agriculture (SAWA), which looks at the use of treated wastewater in agriculture to promote food security and sustainability.
A host of other initiatives and plans were introduced by the government in recent years to attract investment, promote sustainability, and provide technical assistance to small farmers, who represent some 80% of the national agricultural production. For example, to ensure agricultural expansion is done in a sustainable manner in the Orinoquía region, one of the most biodiverse regions on the planet, Colombia has partnered with the World Bank's BioCarbon Fund Initiative to enable the necessary conditions for the adoption of sustainable and low-carbon natural resources management. Moreover, a USD20-million grant from the fund will help farmers in the region to sustainably increase production and realize the region's full agricultural potential.
Ever since the 2016 peace agreement, billions of dollars in investment have been injected into Colombia's agriculture sector. In fact, Colombia has become the most business-friendly destination in Latin America. According to the World Banks' Enabling the Business of Agriculture (EBA) ranking, Colombia now ranks first in the finance indicator, which measures laws and regulations that affect access to financial services for farmers and agribusiness, and third in the water indicator, which measures key elements that impact farmers' access to water.
One notable investment is by Acumen, an impact investment fund that aims to help build a world beyond poverty. The fund invested USD876,000 in Acceso Colombia, a local agribusiness focused on improving incomes of smallholder farmers, especially farmers who are displaced or victims of conflict, Afro-Colombians, and women.
While such efforts to boost financial capacity of small farmers will lead to greater productivity and benefits for all stakeholders, it remains to be seen how Colombia will balance its need for higher agricultural output with its obligation to protect its diverse