FRUITS OF LABOR

Colombia 2017 | AGRICULTURE | REVIEW

As peace negotiations are finalized, Colombia is moving forward to draw attention to newly available arable land in the post-conflict era—without compromising on sustainability.

Providing the third-largest source of Colombian exports, the agriculture sector continues to be a staple of the local economy. While 2015-2016 saw many sectors affected by falling oil prices, agriculture took only a minor blow, demonstrating the solidity of the sector and its resilience to external market forces. As of late 2016, the agriculture sector represented over 17% of Colombia's total exports, just behind manufacturing at 25% and hydrocarbons at 51%.

However, it is widely accepted that Colombia has yet to truly tap into its potential as an agriculture producer and exporter. Of its nearly 44 million ha of arable land, only 7 million ha is currently being cultivated. Decades of conflict in rural areas, combined with a lack of unifying infrastructure for developing the sector, are two factors that have hindered fast-paced growth.

According to Rafael Mejia López, former President of the Agricultural Association of Colombia and the Sociedad de Agricultores de Colombia (SAC), Colombia produced 25.6 million tons of agricultural products in 2000, while in 2015 the country produced 32 million tons. At the same time, exports rose from 4 million tons in 2000 to 4.2 million tons in 2015, demonstrating overall marginal growth year to year. Demand, however, grew at a much more rapid pace, as imports increased from 5.5 million tons in 2000 to 11.4 million tons in 2015. In 1H2016, Colombia imported 6.7 million tons of food, an 11.4% increase from 1H2015. Regardless, the agriculture sector posted 2% growth in 4Q2016, rising to account for 6% of the nation's total GDP. Meanwhile, exports during 1H2016 increased by 2.2% YoY, signaling an acceleration of growth figures across the board.
In 2017, the political situation is expected to stabilize further as a ceasefire is enforced and the government makes even stronger commitments to the growth of the agriculture industry. High on the agenda is ensuring that the growth is not only sustainable, but also beneficial to small- and medium-sized farms, which comprise the vast majority of the farming industry. To that end, government officials are identifying ways to help farmers expand their operations without negatively impacting the local way of life or the surrounding environment.

CROPPING UP

Rice, beans, cassava, maize, sugar, coffee, bananas, palm oil, and avocados are just a few of Colombia's most-produced crops. The palm oil sector in Colombia captures one of the largest shares of the economic and geographic pie. Approximately 500,000ha of land in Colombia is dedicated to the cultivation of palm oil, a product that has been manufactured in the country for over five decades, and exported to Europe for the last 25 years. As the dust settles in previously conflict-stricken areas, more and more land is available for the production of palm oil. However, for sustainable development to flourish, serious government support is necessary. According to Jens Mesa-Dishington, Executive President of the National Federation of Oil Palm Growers (Fedepalma), “Some of the rules and regulations need stability, especially if we are to have a sector that is for the long term. We need more flexible regulations that fit the needs of the agriculture sector. Many of the regulations are thought out for the urban sector, not the rural needs. The needs of the rural sector are different." Mesa-Dishington also called on the private sector to take notice of the potential of the palm oil sector, in particular when it comes to innovation and bringing business to previously underserved areas. “We are a tropical country, and if we are talking about opportunities in the rural sector, palm oil comes on the list as an important sector with many opportunities. A sector like palm oil can grow in Colombia, but we need investors," he concluded. As of early 2016, the Colombian government reported that the local agricultural sector attracts just 1% of all FDI injected into the country, highlighting the potential impact that larger investment activity could make.

Carlo Vigna, Director General of Poligrow, echoes the sentiments of Fedepalma's leadership, yet argues that the first priority for the palm oil segment is to attract investment from public institutions, due not in small part to the necessity of building an environmentally friendly industry. “We currently have a certification from Rainforest Alliance, and we are working on receiving a certification from the Roundtable on Sustainable Palm Oil (RSPO)," Vigna told TBY. In 2017, the company seeks to establish a production plant in Mapiripan in order to increase production volumes, as well as a refinery project designed to allow Poligrow to diversify its offer of palm-based products. Poligrow's efforts to capitalize on newly available land, as well as encourage local communities to be involved in the expansion of its business, has earned the company a solid reputation in the agriculture sectors at large. For people living in areas where Poligrow does business, “We have noticed a shift in their quality of life: when we first arrived, people would approach us asking for food, healthcare, and other necessities. Now, they approach us with business ideas, which shows how far they have come in being able to visualize a better future," Vigna explained.

The main banana producing areas in Colombia are Antioquia, including Apartado, Turbo, and Chigorodó, which comprises 37,100ha and can yield a production of 1.2 million tons annually; Guajira, including Riohacha and Dibulla, with 2,096ha and a production of nearly 75,000 tons annually; and Magdalena, including the Zona Bananera and El Retén, which combine to form an area of over 11,000ha and boast a production capacity of nearly 400,000 tons per annum. According to local forecasts, Colombia was expected to harvest bananas from well over 83,000ha of land throughout the country, with an early production estimate of 2.2 million tons overall.

Sugarcane, which can be harvested year-round in Colombia, is another important product for the sector. It is the main ingredient in producing high-purity ethanol, an important fuel source that could reduce greenhouse gas emissions by 74%. Looking ahead to the future, Colombia has the potential to take the lead on the production of biofuels such as ethanol, which can also support the energy sector through the co-generation of electricity. While a significant 85% of Colombia's sugar is still harvested by hand, companies such as Manuelita are capable of producing 4.2 million tons of sugarcane per year. With 500 years of history, the local sugarcane industry is at once a legacy of Colombia's agricultural past and a boon for the future of agribusiness.
Luis Fernando Londoño Capurro, President of Sugarcane Growers Association of Colombia (Asocaña), told TBY in an interview that his organization is dedicated to moving the industry ahead by strengthening ties with partners abroad, as well as rising up to meet international standards. “I have been working on formalizing labor in the agro-industry, in a form now recognized by the US Department of Labor. That department is monitoring our labor action plan, which is part of our FTA with the US. The five sectors that have been defined as complying are mining, ports, power generation, flowers, and the sugarcane agro-industry," he said.

WELL GOVERNED

In late 2015, the government launched a program to support wider agricultural production, in tandem with the need to supply more food—as well as more opportunities—to rural areas of the country. The Colombia Siembra initiative began allocating up to USD500 million from 2016 and will continue through to 2018. These funds will primarily be used to invest in equipment, irrigation, transportation, and other resources needed to cultivate an additional 1 million ha with rice, corn, soybeans, and vegetables. When complete, Colombia Siembra, or “Colombia Sows," will have created 260,000 jobs in rural areas and stimulated growth to reach a pace of 6.2% by 2018.

In 2015, 83% of farmers lacked the sufficient machinery and infrastructure to produce at competitive prices, and under 10% of farmers had ever received technical assistance to develop their plots. Colombia Siembra was designed not only to address the needs of small- and medium-sized farmers, but also to support exportation, with the goal of reaching 4% annual growth in agricultural exports.
The UN's Food and Agriculture Organization (FAO) has also stepped in to support Colombia in the wake of peace accords through programs that will ensure land reform, safeguarding rights to property or access to land, and protecting forests and fisheries. The agency is also expected to offer expertise in terms of monitoring and evaluating local social protection programs. At a press conference, UN ambassador Juan Mesa Zuleta noted that Colombia is among seven countries identified by the UN “that can best contribute" to ending world hunger, as it is the only country in South America with access to both the Atlantic Ocean and Pacific Ocean, and has huge potential to increase production, and subsequently exports, exponentially

After investing nearly USD28 billion toward exporting Colombian products abroad since 2010, the government is currently seeking ways to delve into new markets in 2017. Avocados are expected to be exported to the US by the end of the year, and China is the next target market. The Minister of Agriculture, Aurelio Iragorri Valencia, had already started formal proceedings to begin exporting avocados to China, while opening up Peru as a trading partner for avocados in late 2016. Nevertheless, Colombia will still have about 35 million ha of arable land that could be incorporated into the total cultivated area without any deforestation or serious harm to the environment. Experts have noted similarities between Colombia's eastern plains and the Brazilian Cerrado in the 1990s. With major state-led investment, arable fields in northeastern Brazil became a major producer for soybeans, corn, and cotton. Should Colombia receive comparable government support and more interest from investors, many suggest that a huge agricultural boom is close at hand.