Emerging Markets / June 28, 2016

Colombia’s Agricultural Outlook

World population is expected to reach 9.1 billion by 2050, according to the Food and Agriculture Organization of the United Nations. Furthermore, said population is expected to be 70% urban, which stands in stark contrast to 50% today. This means that fewer hands will have to feed more mouths. Likewise, another concern given the demographic dynamics of developing nations is the increasing demand for energy. Therefore, the search for more agricultural land, higher yielding crops, and biofuels represents a worldwide opportunity. Over the last couple of weeks, I have been discussing the advantages of agribusiness in Colombia with representatives from ProColombia, the government agency in charge of promoting the country as a business destination. Colombia has enormous potential when it comes to agricultural and commercial development. This article discusses the facts concerning the advantages of Colombia as a strategic location for agricultural investing and its opportunities looking forward.

Colombia is an increasingly stable and strategically located hub in Latin America with both a regional and a global vision. Belonging to regional unions such as Mercosur, the Pacific Alliance, and the Andean Community (CAN), Colombia enjoys easy access and lower customs fees (if any) when entering other Latin American markets. Likewise, Colombia has Free Trade Agreements (FTA) with the European Union, the United States, and the European Free Trade Association (EFTA). According to the President of ProColombia, Felipe Jaramillo (@FelipeJaramill0), Colombia has preferential access to a market of 1.5 billion consumers worldwide. Furthermore, Colombia, along with the other members of the Pacific Alliance, looks towards the emerging markets of Asia Pacific as natural commercial partners and is seeking to strengthen those ties. These elements make of Colombia a major player in the LATAM region and one that enjoys the advantages of commercial relations with nations worldwide.

Amongst the most profitable agricultural products in Colombia, other than the traditional staple of coffee, several stand out for their versatility. For example, cocoa trees are an important and high yielding commodity, particularly given the fact that traditional cocoa suppliers in West Africa are suffering the increasing threat of regional instability. Furthermore, Colombia has commercial agreements in place with the major chocolate refining countries in Europe. Likewise, the Colombian government has undertaken an ambitious campaign to establish bio-refineries and biomass plants in order to diversify energy production. This initiative goes in tandem with a high production of ethanol-yielding flora such as palm oil and sugar cane. Following the example of countries like Brazil, the Colombian government and farmers have realized that developing a biofuels industry provides increased energy security and aids agricultural production because of the possibility for some commodities to participate in two distinct markets.

Another market in which Colombia has great potential is that of exotic fruits. Just as Latin American products such as Quinoa and Açai have created niches within the middle and high income markets, Colombian fruits like Lulo (solanum quitoense) and Feijoa (acca sellowiana) hold the same potential. Finally, according to ProColombia, the Colombian National Agency for Infrastructure is in the midst of a large-scale port renovation and optimization venture, in conjunction with international partners through Foreign Direct Investment (FDI). These major Colombian ports include Cartagena and Barranquilla on the Atlantic coast, Buenaventura and Tumaco on the Pacific coast, and San Andres in the Caribbean, off the Central American coast. Such an infrastructure upgrade will lower transportation and operation costs in Colombia, making the national exports much more competitive in the world markets.