Colombia is an increasingly attractive option for agricultural investors.
While already considered a popular tourist destination, what many people don’t know is that Colombia is one of the most business-friendly countries in the Latin American region. Since its introduction into the Organization for Economic Cooperation and Development (OECD), the country has gained visibility as one of the most attractive South American territories for foreign investment.
So far, investors have largely focused on business sectors that have traditionally benefited most from foreign investment – mining, energy, information, and communication technology, to name a few. But there is a growing interest in Colombia’s agricultural sector as a low-risk, high-reward investment environment.
What Makes Colombia Such a Compelling Area to Invest?
Colombia has several unique characteristics that make it an excellent opportunity for foreign investment compared to nearby Latin American countries as well as the United States. The most compelling drivers of foreign investment in Colombia include multiple geographic advantages, lower capital requirements, and excellent tax benefits.
1. Colombia’s Geography Makes It a Strategic Trade Hub
Colombia is the only South American country with coastlines bordering both the Pacific and Atlantic oceans, giving it exceptional access to global markets. It is simpler and more profitable to move agricultural goods through Colombia than many other Latin American countries, and one can easily send goods to both the western and eastern coast of the United States.
Another reason is Colombia’s proximity to the equator, which gives it an excellent tropical climate at low elevations, but only 14 percent of the country is covered in rainforest. This is because Colombia is filled with mountains, giving rise to numerous local sub-climates that differ radically from the equatorial tropical standard. Temperatures change dramatically with elevation, with every 3,000 feet of altitude translating into an average drop in temperatures of around 10 degrees Fahrenheit.
Last but not least, the country’s government has established an extensive free trade agreement network, with preferential access to more than 60 countries around the world. Exporters based in Colombia leverage this free trade network to gain better access to 1.5 billion consumers around the world.
2. Colombia’s Five Regions Are Suitable for a Wide Range of High-Price Export Crops
Colombia is divided into five main regions: the Andes Mountains, the Pacific Coast, the Caribbean Coast, the Llanos (plains), and the Amazon Rainforest. Each one of these regions harbors a unique ecosystem suitable for a specific set of agricultural activities.
Colombia is well-known as a producer of coffee beans, sugarcane, bananas, cocoa, and rice, but its many different ecosystems can support much more.
Some of the most valuable agricultural land lies between the mountains and the sea, in the regions west of Bogotá – like Valle del Cauca, Caldas, and Quindío. The land in these areas is optimal for growing avocados and limes, which are a burgeoning Colombian export commodity. The northern region of Montería, close to the Caribbean coast, is known for cattle ranching and coconut production, the latter of which is experiencing unprecedented global demand.
3. Colombia Invests in Innovative, Sustainable Farming Practices
Colombia is a leader in global sustainability and climate change research. Together this helps drive investment in a wide variety of innovative programs designed to equip tomorrow’s farmland owners with the tools and knowledge they need to enhance food production and security for the region.
One example of this type of initiative in action is the CGIAR Research Program on Climate Change, Agriculture, and Food Security. This initiative helps farmers implement technologies that increase productivity and food security while adapting to seasonal variabilities that have historically impacted farmers’ livelihoods. It gives people better information about what to plant, when to plant it, and what fertilizers to use.
4. Colombia Invests in Infrastructure and Land
Colombia has a well-developed tech ecosystem and high-quality technological infrastructure. Data connectivity, transmission, and stability are assured through nationwide fiber optic cabling, and the Colombian government has consistently led digital transformation efforts around the country. This reinforces Colombia’s position as one of the key entrepreneurial markets in South America.
Colombia also consistently invests in transportation infrastructure across its mountains, rivers, and forests. Since the 1990s, the government has published infrastructure initiatives in “generations.” The latest “4G” program included more than 3,000 miles of roads, 750 bridges, and 40 tunnels at a cost of $13 billion.
The Colombian government is also an active contributor to the local agricultural sector. In 2021, the government has committed to invest more than $25 billion in revitalizing rural areas. This initiative will help further develop education and build agricultural logistics solutions over the next ten years.
According to World Bank statistics, the amount of dedicated agricultural land in Colombia has risen considerably in the last decade. In 2018, this figure stood at 44.6 percent – well above 2008 figures in the mid-30s:
Source: World Bank
5. Colombia’s Capital and Labor Costs Are Low
Colombia has long established itself as a popular destination for companies looking to outsource Spanish- and English-speaking labor to a highly skilled workforce at low costs. Average wages and living costs are significantly lower compared to other countries, particularly in rural areas. As of 2021, the average minimum wage in Colombia is around $260 a month.
While urban populations experience an ongoing boom in IT and other sectors, Colombian agriculture remains undervalued compared to its earning potential. Investing in rural areas in emerging countries can give investors a significant edge over the more crowded urban opportunities in developed countries that many foreign investors look towards first.
Colombia Is Ready for Agricultural Investment
While Colombia’s agricultural economy has expanded considerably in recent years, now may be the best time for foreign investors to become part of this vibrant national growth story. New government-led initiatives and a net influx of foreign investment capital will likely drive high returns for Colombian investments in the next few decades.
Compelling investor initiatives and a stable, growing investment environment make Colombia one of the most attractive territories for foreign investment in the world right now. Learn how to capitalize on the upcoming trend towards South American agricultural prosperity and how you can use it to build a portfolio resilient to many of the risks of other asset classes and territories by filling out the form below.