By TBY | Colombia | Aug 10, 2015
Colombia's agricultural sector lags behind its potential. To realize its potential, the state must promote more investment, and take the lead in new development.
Straddling the mountainous Andes, dense Amazonian green and tropic Caribbean wetlands, the agricultural environment of Colombia presents a classic double-edged sword. As the world’s second most biologically diverse country it has a remarkable potential to reinvent itself as an agribusiness powerhouse. Unfortunately this same fecundity leaves Colombia’s environment particularly vulnerable to the ravages of climate change and human avarice.
Recognising the scale of the challenges ahead, former Minister of Agriculture Ruben Lizarralde has advocated an injection of $25 billion for the sector to develop infrastructure projects to counteract extreme weather patterns. Despite the plea and ominous predictions from international bodies such as the OECD, President Juan Manuel Santos’ 2015 budget confers a static $1.7 billion allowance for rural development. Even this modest proposal finds itself threatened by a plummeting peso at the tail end of 2014 as spiralling crude prices undermine budgetary calculations optimistically assuming a $98 per barrel minimum.
Solutions for the long haul are essential as challenges mount and threaten to sabotage the governments’ ability to be proactive rather than permanently on the back foot.
Internationally celebrated for its coffee, the world’s second largest producer sets aside around 20% of its fertile land for cultivation of the beloved bean. Yet the industry remains dismally exposed to the impending havoc of climate change with rising temperatures and volatile precipitation damaging harvests. Deforestation caused by mining, oil exploration, logging and human habitation leads to approximately 900,000 hectares of pristine forest being stripped each year. Underdeveloped irrigation, and lack of state of the art agricultural techniques has degraded prime Andean land to the extent of destabilising the nations’ water supply.
Compounding the difficulties is the countries notorious positioning within the illegal narcotics trade with Colombian production accounting for roughly 90% of the world’s cocaine. Entire ecosystems have been destroyed through wanton chemical dumping by cocaine processors, while between 50,000 and 300,000 hectares are cleared each year to further the trade.
Intimately related is the toxic legacy of the civil war with FARC from the early 1960s well into the new millennium. USAID figures indicate that, at the conflicts height, ”armed groups acquired approximately 4.5m hectares of land, or roughly 50% of the country’s most fertile land”. With approaching 3 million displaced people, Colombia is surpassed only by Sudan and Syria in this depressed demographic which, coupled with severe land inequality (57% of farmers own just 2% of the land), severely disrupts the industry’s growth potential.
There are indications, however, that policy makers are beginning to act. Agriculture Minister Valencia Iragorri has identified price negotiations with suppliers, importing raw materials, regularising land rights, opening agricultural schools as key strategies in a bid to ”transform the agricultural sector”. Projects aimed at women will receive at least 30% of the budget while 41 new credit lines will help methodise the process by which farmers obtain loans.
Enclosed within the $108 billion budget are a series of reforms, which expand the role of central government in related social development policies allocated an estimated 45%. In an encouraging first, education ($12,385) will secure a larger share than defence spending ($12,080). The $6.5 billion deficit spurred by crude volatility has initiated a tax reform proposal seeking to reactivate the expired ‘4×1000’ tax (a 4 peso per 1,000 charge in financial transactions) and a controversial wealth tax. $24.4 billion is expected to be raised in forthcoming years, which, if spent wisely, should alleviate agricultural concerns.
Colombia has huge potential in the agricultural sector, and impressive yet dormant hydroelectric capacity. With the application of intelligent political and financial pressure, a tough ask in any developing country, and agribusiness can flourish.