By: John Fennerty, Counselor for Economic Affairs U.S. Embassy Bogotá.
Published in Business Mail magazine, available here
Colombia has all the right ingredients to become one of the world’s major agricultural producers. Its favorable climate, access to the Pacific and Atlantic oceans, and abundance of arable land make it prime for development. The demobilization of the FARC is bringing a renewed sense of security to a number of municipalities and previously unseen opportunity to develop this sector. Implementation of the Zidres law could also usher in the regulatory framework needed to develop the sector. As President Santos said in December, Colombia could become a “breadbasket for the world.” But it will take greater coordination between the public and private sector to fully realize this potential, including clarity surrounding property rights and infrastructure improvements.
One of the prime areas for potential agricultural growth is the Llanos Orientales in the departments of Meta, Casanare, and Vichada. While the Llanos contains between 2.6 and 4.5 million hectares of unused land, the area requires irrigation and expensive soil enrichment programs. Through public-private partnerships, Brazil was able to greatly increase agricultural output in the Cerrado, a similar environment to the Llanos. If fully implemented, the Zidres law could lay the foundation for private sector investment in this untapped area. Companies could bring the technical expertise, capital, and resources to develop the sector to meet local consumer demands and to boost exports. The establishment of clear, coherent rules for the law’s implementation is key to encouraging investment.
Providing reliable, affordable infrastructure to bring goods to market is also pivotal to encourage investment. The execution of the ambitious Fourth Generation road projects is a lynch pin to unleashing growth and lowering burdensome transportation costs. Crucially, the government will need to continue support for the expansion of tertiary roads. I applaud President Santos’ February announcement to build 3,000 kilometers of new tertiary roads over the next 18 months. Tertiary roads can transform rural Colombia, bringing connectivity and access for previously isolated communities, enabling profitable licit economic growth for the first time.
Despite the challenges, there is much to celebrate. Colombian fruit exports, including pineapples and mangoes, are booming. Improved refrigeration techniques have led to banana exports increasing by 14 percent since 2015. While these products face competition from other Latin American countries, Colombia can certainly compete. Flowers continue to be profitable, Dane statistics show 2016 exports increased by 1.5 percent since 2015, totaling USD 1.3 billion world-wide.
Cacao and coffee are two other strong areas of growth, and the peace accord has opened up new opportunities for expansion in both sectors. Colombia, as a specialty cacao producer, is in a position to benefit from international manufacturers looking for new suppliers. USAID and FAS have joined efforts for a long-term project, Cacao por la Paz, aimed at improving cacao production, quality, and value chains, along with strengthening public and private institutions like the Cacao Federation. Coffee production also continues to improve; output could reach 20 million bags by 2020, up from 14.1 million bags in 2015.
Colombia is naturally blessed with all it needs to become an agricultural powerhouse. Collaboration between the public and private sector is essential to turning this dream into a reality.