Emerging Markets / November 26, 2018

Colombia’s “Economy of Place” Feeds the World

After over 50 years of conflict, Colombians are digging into their soil and focusing on agricultural exports as a path towards future prosperity. During former president Juan Manuel Santos’ two terms in office, well over 250,000 jobs were created in the agricultural sector. This established agriculture as the fastest growing sector of Colombia’s economy in 2017. According to former Minister of Agriculture Juan Guillermo Zuluaga, the rise of Colombian agricultural exports has boosted the national GDP and helped reduce rural poverty.

Colombia’s “Economy of Place” Feeds the World

At the World Economic Forum 2018, the former president explained that agricultural production is key to Colombia’s future. “We are leaving a country at peace after more than fifty years of war; and a strong economy, an economy that has its fundamentals in place” said Santos. “More than one third of the country was out of bounds because of the war. And it is very fertile, very rich terrains,” Santos continued. The introduction of peace freed up thousands of acres of rich farmland, a change that ushered in a surge of international investment interest.

“So we are seeing forward investment in many areas coming in, and you mentioned one which is very particular, where I think the benefit is going to be huge, which is the agro-business, the agriculture areas,” Santos noted. “We are promoting investment in agro-business . . . The sector that is growing the fastest in Colombia.”

This growth has been on international display as Colombian producers are forging international relationships and exploring new markets that had yet to be tapped to their full potential. Colombia was the featured guest country at Macfrut 2018, a trade fair for fruit and vegetable professionals operating within the Italian and European markets. Colombia was represented by 25 companies that produced tropical fruits. “At Macfrut 2018, we managed to attract new customers not only from Europe but also from China, Abu Dhabi and South Korea,” commented Adriana Senior Mojica, president of CCI Colombia.

In 2018, a new gathering, Fruitnet Forum Colombia, emerged. Delegates from 15 countries made their way to Bogota to network, analyze their supply chains, and dialogue about the steps Colombia needs to take to maximize its export potential. The event’s takeaway message was: “Colombia on the right path to growth!”

This optimism seems well founded considering from 2006 to 2016, Colombian exports enjoyed an annual growth of 5.5% in the European market according to ProColombia’s Andres Castellanos. “We predict this trend to continue,” Castellanos says. During that decade, Colombian companies exporting agricultural products to the EU jumped from 140 to 230.

One of these new export companies is Isashii (the name means “earth” or “virgin land” in the indigenous Wayuu language of northeastern Colombia). The upstart, which provides fresh and dried Colombian produce, does not have its own production, preferring to focus on international marketing and allowing local producers to do what they do best.

“Colombia is a country with a great biodiversity of climates and soils which allows us to have production and variety of fruit during most of the year, not to say all year, which favors us and gives us an opportunity compared to other countries where climates are a little more marked and their productions are governed by these conditions,” comments Isashii General Manager Andres Riaño.

Riaño explains that Isashii sees great potential in the way Colombians view their land, not only as the centerpiece of their culture, but also as an opportunity for future innovation and growth. Colombians are seeing “the countryside as an opportunity for business and improvement of the quality of life of their families, [and] turning their small plots into small businesses with greater awareness, organization and implementation of technologies that help improve production of their crops,” Riaño adds.

As exports flourish, one downside of all this growth is that the famously healthful foods produced in Colombia are not necessarily nourishing Colombian people. Though the FAO recognized Colombia as one of the “world’s biggest pantries” due to the fact that Colombia holds Latin America’s third largest number of hectares of fruit trees, not enough of these foods are ending up on Colombian plates. On average, Colombians are consuming 90.5 kilos of fruits and vegetables each year—that’s 55.5 kilos below the recommendations of the World Health Organization.

Encouraging Colombian consumption of these products was a secondary goal of MacFrut 2018, but price is likely a more limiting factor than awareness. John Franco, manager of Frutas Comerciales (FC), explains that “it is not profitable to sell exotic fruits for domestic consumption” as foreign markets offer prices five to six times higher than local markets. Accordingly, over 80% of FC’s production is exported to other countries.

Colombia’s verdant hills do comprise one of the world’s great pantries, and Colombians and investors alike are eager to introduce new parts of the world to the flavors of Colombian produce. As new players enter the game, a focus on sustainability and local health will ensure that all stakeholders reap the benefits of new growth.

(Read more about Manufacturing and International Trade in China)