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Colombia 2019 | AGRICULTURE | VIP INTERVIEW

TBY talks to Andrés Valencia, Minister of Agriculture and Rural Development, on state development policy, the export economy, and medical cannabis.

Agriculture is a pillar of the Colombian economy. How will the government's development policy aid the agricultural sector?

The purpose of the policy is to order two of the most important processes: production and marketing. The first, through the strategy of Production Management and the second through the "Coseche y Venda a la Fija" strategy (Contract farming). The Production Management strategy seeks to promote agricultural transformation, strengthening planning processes to make efficient use of resources, smoothing oversupply and scarcity cycles, reducing price volatility, encouraging innovation and technological development, improving quality according to market demand, and integrating agribusiness production with small- and medium-sized producers, while seeking to enhance the competitiveness of national production. Furthermore, the strategy will concentrate public and private investment in the most productive regions identified by the UPRA, prioritizing the following 10 products: potato, onion, rice, corn, avocado, panela, forestry, cotton, milk, fishing industry, and aquaculture. The Production Management strategy relies on five components. The first is agricultural frontier, which entails the identification of the best performance municipalities through a zoning model. The second component is productive planning with a focus on reducing price volatility. Another element is technical assistance through the regulation of Law 1876 of 2017 for the provision of the agricultural extension service. The fourth component is access to finance through Finagro services such as Special Credit Lines (LEC), the Agricultural Guarantee Fund (FAG), and the Agricultural Insurance Incentive. The last component, improving infrastructure and marketing, includes, for example, access to land adaptation, processing and storage infrastructure, as well as the strategy of contract farming and tackling agricultural smuggling. “Coseche y Venda a la Fija” is a well-defined strategy designed by the national government using the contract farming model. This model can be defined as agricultural production carried out according to an agreement between a buyer and a farmer, which establishes conditions for the production and marketing of a farm product. Through this strategy, the national government seeks to generate greater equity in the distribution of generated profits throughout market chains, such that producers obtain better and more stable income. To encourage the coordination of small- and medium-sized producers with the industry, the Ministry of Agriculture and Rural Development has designed and implemented financial and technical incentives. Finagro, through intermediaries such as banks and financial cooperatives, will give the producers financial incentives. For this purpose, the National Agricultural Credit Commission (CNCA) created the LEC with a subsidized "contract farming" rate aimed at small- and medium-sized producers. To access finance, the producer must prove to the Financial Intermediary the subscription of a contract, which must consider the following: The term for the fulfillment of obligations derived from the aforementioned contract that guarantee the payment of the credit obligation may not exceed the term of the credit; the subject matter of the contract must be the purchase and/or supply of agricultural products with a third party; the connection as beneficiary of the payment to the financial intermediary; and the price or a system for calculating the price as well as the quantity or a system for determining the quantity. The interest rate of this LEC is equivalent to the DTF - 1% a.e. for small producers and DTF + 1% a.e. for medium producers, reaching subsidies of 7% and 6% a.e., as well as FAG coverage of 50% and 40%. The term of the credit must be in accordance with the productive cycle plus 60 calendar days, without exceeding one year. The Rural Development Agency (ADR) is to be responsible for the technical incentives. These incentives seek to strengthen marketing processes and link producers to stable market chains through services such as business training, legalization of associations, marketing, support for certification in BPA or in BPM, technical assistance, and participation in business roundtables.

What role does agriculture play in Colombia's export economy, and how will the government's strategy to improve the export economy affect the agriculture sector?

Agriculture has historically been among the major engines of the Colombian economy, allowing Colombia to position itself as a supplier of high-quality and differentiated products such as cocoa, coffee, flowers, and bananas. The strategy of boosting the country's exports is based largely on the promotion of non-traditional products, and a strategy is aimed at overcoming trade barriers for agricultural goods. Being a tropical country with unique agro-ecological conditions and a variety of products with global appeal, Colombia has great competitive advantages in the agribusiness sector.

In partnership with Canada, the ministry has launched the “Agroemprende Cacao” program to support entrepreneurship in the cacao sector. What does this program seek to achieve, and what does the partnership with Canada mean for Colombian cacao producers?

The program aims to increase productivity of the farms under 5,500 cocoa producing families by 30%; increase women empowerment and participation in the sector; sow or improve over 3,300ha of cocoa; increase the volume of cocoa sold through 55 associations and cooperatives; and establish funds or commercial alliances to support cooperatives. The project will be implemented in Putumayo, Meta, Boyacá, Santander, and Antioquia, among others, and seeks to strengthen and support at least 3,300 ha under agroforestry systems, including cocoa, plantain, and timber. It also aims to improve access to new markets and consolidate sustainable business at the cooperative level with Canada, the 13th largest importer of cocoa beans in the world, representing 1.9% (USD180 million) of global sales.

How is the government looking to simplify the ICA licensing processes that medical cannabis companies must undergo?

The process to obtain the licenses for growing cannabis is fundamental for the good technical development of the crop. The medical cannabis sector is governed by existing regulations for the management, production, and commercialization of seeds necessary to guarantee the technical characterization of the materials to be cultivated. On the other hand, the Ministry of Agriculture and Rural Development provides technical advice to anyone who requires it to comply with the requirements demanded by the ICA in matters related to the acquisition of certifications issued.