LatinFinance - September/October 2016 - 52

COLOMBIA
AGRICULTURE

Land reform and economic growth in Colombia's rural areas are
critical to the country's future prosperity following the peace
agreement. By Mat Youkee

Restoring order

52 L ATINFINA NCE.COM - September/October 2016

over land ownership and policy remain.
Beyond the plantation
Colombia's agricultural figures are given a
misleading gloss by its world-famous and
buoyant coffee sector. In 2015 the country
boasted its largest crop in 23 years, with
total production reaching 14.2 million 60kg
bags and over $2.5 billion in exports. The
java bonanza spurred Colombia's agricultural GDP to 3% growth over the previous
year. But take coffee out of the equation,
and growth was just 1.1%.
Across the country's diverse landscape,
plantation crops such as sugar cane, bananas and palm oil are widely grown, and the
flowers-for-export industry has benefited
from a weaker peso. "The violence of the
last 60 years has seen agricultural capital
migrate to specific regions of the country
with plantation models," says Ricardo Jaramillo, CEO of Agrofuturo, Colombia's largest
agribusiness conference and exhibition.
The real malaise of the agricultural sector lies in the rapidly declining harvests of
staple crops - such as potato, corn and
COCOA: Colombia's government is pushing
cultivation of cocoa, among other crops, to
spur rural growth

Source: Istockphoto

f Colombia's peace deal is ratified by
plebiscite in October, the agricultural sector
could be one of the biggest beneficiaries
- and a crucial ingredient for peace and
prosperity.
It's been more than five decades since
civil war broke out in Colombia, a conflict
that has not only claimed countless lives
but also brought social, economic and
infrastructure development to a standstill,
especially in the countryside.
Now the fighting finally appears to be
over, thanks to a ceasefire agreement
signed in June by the government and
the Fuerzas Armadas Revolucionarias de
Colombia (FARC), the country's dominant
rebel group.
Given the IMF forecast of just 2.5%
economic growth this year, compared with
4.4% in 2014, economic and social development of Colombia's countryside is vital.
Rural areas suffered the most during the
conflict, and it is here that most demobilized guerrillas will likely remain. Following
years of neglect, the countryside requires
new economic opportunities as well as public services such as health and education.
The government also hopes to provide
an alternative to growing coca, used in
the production of cocaine. For small-scale
farmers, cultivation of coca has provided
far higher revenues than traditional crops.
When crop spraying - a key element of Plan
Colombia, a multi-billion-dollar US military
aid program - was banned in 2015, cocaine
production shot up 46%. In July, the government launched a pilot program, overseen by the UN counter-narcotics division,
aimed at providing subsidies to farmers to
entice them to switch to other crops.
But the country's need for development

and changes in its land and crop practices
go far beyond the drug trade. The peace
deal and Colombia's economic future depend on providing economic opportunity
in rural regions.
"Ever since peace negotiations with the
FARC began in 2012, the question of how
to develop rural Colombia has been key to
the process," says Rafael Mejía, president
of the Colombian Agricultural Society. "For
decades the countryside has been forgotten
by the state, but now we have the chance to
close the chasm between rural and urban
areas."
The government has already begun
formulating what many hope will be a
coherent rural policy. New initiatives have
been launched to promote the cultivation
of temporary crops and development of
road projects to link distant regions. Most
important, the new law for Zones of Rural,
Economic and Social Interest (Zidres) aims
to open up large tracts of unproductive
land to private agribusinesses.
Colombia has vast tracts of underutilized agricultural land. Of the country's 113
million hectares of rural land, 44.5 million
are suitable for crop cultivation, but only
7.1 million are sown. Optimists compare
the wide expanses of the Llanos, the country's eastern plains, to the
Brazilian Cerrado 20 years
ago. Following major stateled investment, the fallow
fields of northeastern Brazil
became major producers of
soybeans, corn and cotton.
While the rewards for
first movers in the Colombian agriculture sector are
potentially huge, investors
are cautious. A continued
security threat, delays to
infrastructure projects and
major legal uncertainties

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