Focus: Betting on agriculture

Good to Grow

Nov. 3, 2021

Colombia's rich soil and ideal climate make agricultural enterprises profitable and investment worthy.

Given that Colombia has one of the highest rates of biodiversity in the world thanks to its rich topsoil and abundance of water resources, it is hardly surprising that the country is also a major producer of agricultural products in the LATAM region and beyond.

In addition to the country's world-famous coffee, Colombia is a top producer of cocoa, tobacco, bananas, corn, and sugarcane, among others. Agricultural activities contribute directly and indirectly to Colombia's GDP in a major way, while creating almost 20% of all jobs in the country. With such a natural potential for agriculture, different Colombian governments have tried to introduce policies that boost the nation's agricultural output. There are certain subsidies in place to assist the poorer farmers, while the Fund for the Finance of the Agricultural Sector (Finagro) announces different schemes to help the nation's farmers from time to time.

To keep the morale among farmers high, the government often guarantees to buy the surplus production of farmers at a reasonable price which is still profitable for the farmers. And, to reassure the farmers that cheap foreign imports will not be a problem, the government usually determines import quotas for each agricultural product. Colombia's natural potential and the protective policies that different governments have introduced has made Colombia a major agricultural power. The country is already a leading producer of coffee, palm oil, and avocado, and public and private entities are investing heavily in the production of bananas, pineapples, and cocoa. However, coffee is still the most iconic product of Colombia. In 2018, the nation produced some 720,000 metric tons of coffee, making it the fourth global producer of the product. Although, Brazil, the world's number one exporter of coffee can produce up to 3.5 million tons of coffee per annum, most connoisseurs of coffee are unanimous that Colombian coffee has an altogether higher quality.

This brings us to the importance of marketing and branding in agriculture. Thanks to the positive comments of coffee experts about Colombian coffee, the country can capitalize on the quality of its coffee with the help of branding consultants, instead of merely focusing on increasing the volume of production. Marketing Colombia's coffee in North America and Europe as a top-tier, premium product can create a great deal of added-value for the agriculture sector without increasing the pressure on the farmers and—even worse—deforestation for the creation of new farms. The National Federation of Coffee Growers (Fedecafé) plays a key role in the management and branding of Colombian coffee in international markets.

Animal husbandry and cattle raising are also widely practiced by Colombian farmers. Colombia's climate is suitable for the healthy grazing and growth of cattle, which gives a high quality and fine taste to both to Colombia's dairy and meat products. According to some estimates, cattle-ranching makes up 75% of all agricultural activities in Colombia, whereas Colombia's world-famous coffee industry accounts only for 10%. However, there are issues in the cattle-raising industry that need to be addressed. The slaughtering of the livestock is, at times, with cruelty and far from pain-free. And, over the last decades, there have been some concerns about hygiene and sanitation. There is also much room for the industrialization of the cattle-raising industry: many livestock farmers, especially outside Bogotá, still use traditional methods, which put a cap on the milk and meat output of Colombian livestock farmers. However, by 2009-2010, much progress had been made both in terms of animal rights and sanitation. The World Organization for Animal Health now regard Colombia free of many livestock diseases including the notorious foot-and-mouth disease.

Cut-Flowers are yet another important segment of Colombia's agriculture sector. Colombia's position in the cut-flower business in LATAM is comparable to that of the Netherlands in Europe, with just under 200,000 direct and indirect jobs created by the flower trade. The industry also plays a role in the empowerment of women, as over 60-65% of the workers in cut-flower businesses are women. Many foreign investors have been attracted to the cut-flower business, creating even more jobs and ensuring a steady flow of FDI. Over 20% of cut-flower businesses in Colombia are owned by foreign investors and the figure is growing.

If you live in the Americas, especially the US, chances are that the next bunch of roses you receive as a gift or give to someone come from the Bogotá Savanna or the Rionegro region, where fine, sweet-smelling flowers grow easily. Over 80% of all flowers grown in the aforementioned regions are directly exported to the US. The three areas for improvement in Colombia's agriculture are the branding and marketing of its coffee as a premium product, rapid industrialization of cattle-raising, and the expansion of cut-flower industry thanks to the huge market for flowers which exists in North America.

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