Colombian Ag Investment to Benefit From New Infrastructure

Massive changes are coming to Colombia's infrastructure, with huge implications for ag investment in the country.The Via Pacifico project, a massive undertaking that aims to connect Colombia's lush and fertile interior to the pacific coast, will radically transform the country's logistical and market access capabilities. Part of the country's Fourth Generation (4G) concessions program, the project has earmarked USD 17 billion to construct over 4,400 miles of new roads, 141 tunnels, and 1300 viaducts.The Via Pacifico roadway will connect the states of Antioquia, Caldas, and Risaralda, a region also known as the Coffee Axis. The path begins in Medellin and ends in La Virginia, after which there is adequate infrastructure to transport goods and people to the Pacific seaport of Buenaventura.Project OverviewSegmented into three parts, Pacifico 1, 2, and 3 each pose unique engineering challenges. The Colombian government has proven its dedication to this task, recently endowing the Via Pacifico 1 with a $230 million investment, and the country's 4G Road Concession program has drawn support from the World Bank Group.

Stretching 50.1 kilometers, Pacifico 1 is the shortest segment and presents some of the boldest challenges for project engineers. Nestled firmly in the Andes Mountains, this portion of the highway begins at Medellin, a city of over 2 million people. Regular landslides have delayed some parts of the project. However, boasting two extensive tunnels and 56 bridges, Colombia is rising to the challenge of building first-class roadway infrastructure in an emerging middle-income nation.Pacifico 2 offers two strategically placed routes to La Pintada, one beginning in Bolombolo and the other in La Primavera. This intentional design will bring a modern highway system deep into some of the most agriculturally productive lands on the planet. The longest of the three routes at 148 km, Pacifico 3 offers access to Manizales and La Virginia and serves as the tamest stretch of road of the Via Pacifico plan.Roadways of ProsperityThe Coffee Axis stands to benefit massively from this modern roadway. Economically significant crops in the region include limes, papaya, banana, cocoa, coffee, and ornamental flowers. This diversity highlights the robust latent agricultural value present in the area. The Via Pacifico project will offer a modern artery to this otherwise difficult-to-access fertile gem.[caption id="attachment_11020" align="aligncenter" width="519"]

Even during a global health crisis, the Coffee Axis continues to contribute more than 28.3% of total Colombian exports by value in dollars.[/caption]Manuel Felipe Gutiérrez, president of the National Infrastructure Agency (ANI), stated in an interview how this Fourth Generation infrastructure project would bring Medellin closer to the rest of Colombia."With Pereira, travel time will be reduced by almost half. Towards the north, going towards Urabá, the construction of the second western tunnel will change the logic of mobility when you travel to the coast."Having already created approximately 7,700 formal jobs, the new roadways, together with the overall 4G program, stand to raise Colombia's GDP by 4.6 to 5.6% and reduce unemployment by 1.5%.

This ambitious program will allow rural farmers to bring their goods to market with ease, significantly cutting transportation times and hurdles of poor road conditions in the Andean region, such as congestion from cargo vehicles and tractors. In the case of fresh produce, even a reduction of transport by an hour makes a huge difference in storage, transportation costs, and product quality. For example, poor road conditions in Mato Grosso, Brazil account for 32% of total soybean export costs. Multiple studies have evidenced that road infrastructure improvements in rural areas significantly improve farm productivity and variability, and lower poverty levels in rural areas.The Food and Agricultural Organization of the United Nations cites fragmentation and inefficiency in the food supply systems as one of the biggest challenges for Colombia. The Via Pacifica directly addresses this issue by integrating the most fertile regions of the country, allowing for a more robust food supply chain and upward socioeconomic mobility for rural farmers.The Via Pacifico and Colombian Ag InvestmentThere is precedent for roadway developments improving economic efficiency in the hinterlands. ProPacífico released a socioeconomic impact study of the Pacific-Orinoquia Connection, which projects an expansion of Colombia's agricultural boundary by 4 million hectares. The roadway would reduce the cost of transporting a ton of cargo from Puerto Carreño to Buenaventura by roughly 27%.Large-scale infrastructure projects like the Via Pacifico highlight the value of investing in emerging markets. Countries like Colombia possess vast swaths of fertile land, but the value their agricultural production is sometimes limited by poor access to international markets. Ag investment in the country will be especially affected.For Colombia, drastically improved access to Asian markets is a huge opportunity. A growing middle class in China, coupled with high-value import markets in developed regions like Japan, posses huge upside potential for export businesses. Colombian agricultural goods are already gaining recognition in the lucrative markets of Europe, and are now poised to do the same in Asia thanks to the 4G projectThe Via Pacifico project will radically transform Colombia, single-handedly increasing GDP, employment, FDI inflows, and per-capita income. Notably, ag investment in the region will benefit tremendously from the improved logistical capabilities. The extent of the project's effects cannot be overstated, and are a sure sign of the country's bright future.Read more from Farmfolio.