Colombia as an agricultural powerhouse: The unfulfilled promise
This article offers an overview of the current situation of the agri-food sector in Colombia, it’s potential as one of the main food suppliers worldwide and the agro-logistics related opportunities which will enable the country to overcome the hurdles that have kept it from realising its agricultural potential. The case study of the Colombian Caribbean, referred to in the text, is a reflection of the dual potential that Colombia has, both inside and outside of its boundaries, with neighbouring countries such as Aruba, Curacao and Sint Maarten, not materialised due to the complex geography and lack of proper agro-logistics.
Circular agriculture: Where the Netherlands and Colombia meet
In 2018, the Minister of Agriculture, Nature and Food Quality, Carola Schouten, launched the vision on circular agriculture and in the same year, the Minister visited Colombia. As a follow up of this visit, which was focused on sustainability and circular agriculture, LAN Bogota developed a bilateral strategy on circular agriculture with concrete activities to put the LNV vision in practice. In this circular agriculture strategy, both food and food producers are more valued, therefore, providing a solid economic base for producers as well as reducing food losses and waste are ways to realise this vision.
This in turn, can only be achieved by better connecting rural and urban areas, a goal that can be achieved by improving agro-logistics (including cold chains). Improved agro-logistics can directly increase producer’s income by 1) lowering logistical costs for producers in rural areas; 2) reducing the number of intermediaries of a value chain; and, 3) enhancing producers’ participation in the logistics value chain, amongst others. At the same time, better agro-logistics contribute to decreasing food loss and waste by 1) streamlining and shortening the supply chains of agricultural products from rural to urban areas; and, 2) improving infrastructure by introducing multi-modal transport systems and adequate facilities and equipment to maintain the cold chain in all post-harvest segments.
LAN Bogota had a closer look into the needs, challenges and opportunities related to agro-logistics for the Dutch private sector and knowledge centres.
Colombia as an agricultural powerhouse: The unfulfilled promise
With over 50 million inhabitants, the Colombian economy is the third largest in Latin America. With more than 80% of its population living in urban areas and refugee flows coming from the neighbouring country Venezuela, Colombia faces the challenge of feeding its ever-growing cities. In the food supply of megacities like Bogota small farmers play a key role, as it is estimated that 70% of the food consumed in Colombia is produced by them. Therefore, inclusive growth of agricultural producers in the rural areas around these megacities is of vital importance for a country that endured a decades-long conflict originated in the countryside.
The Colombian agricultural sector has traditionally been one of the most important economic sectors in the country. Colombia allocates more than 50% of its soil to coffee, rice, maize, palm oil and plantain production. With access to both the Atlantic and Pacific ocean – being the only country in South America with this geographical advantage – Colombia is positioned among the top five global exporters of products such as Coffee, Bananas and Palm Oil, of which high volumes are certified with sustainable trade standards. It is as well the second worldwide exporter of flowers after the Netherlands. In fact, 21% of the country’s exports in 2018 consisted of agricultural products. Moreover, during the first quarter of 2020 Colombian fruits exports totalised USD 125.3 million, an increase of 9.37% in comparison with the same period in 2019. With a total of USD 51,57 million (41%), the Netherlands is the main destination market of these exports. The Dutch-Colombian cooperation on electronic certification has undoubtedly contributed to this.
Notwithstanding, in Colombia, 9.6 million tons (or 34%) of food destined for human consumption is lost and/or wasted, and 62% of it are fruits and vegetables. On the one hand, food loss is caused mainly at production, followed by post-harvest (including storage) and processing. On the other hand, one of the main causes of the waste of fruits and vegetables in Colombia is that consumers do not buy products with bad aesthetic appearance. Hence, avocado, banana, orange and passion fruit are within the 10 most wasted fruits in Colombia. Besides, the freshness and quality of these fruits are heavily affected by external factors, like temperature and sun.
Colombia has been catalogued by FAO as one of the potential main food suppliers of the world. However, in spite of having over 39 million hectares suitable for agricultural production, the country currently cultivates roughly 5 million hectares. Next to it, out of 106 potential agricultural export products only 36 are now being exported while 28% (equal to EUR 5.2 billion per year) of the food consumed in the country comes from abroad. In consequence, Colombia as an agricultural powerhouse remains an unmet promise. The inadequate agro-logistical infrastructure is, together with the complex geographical characteristics of the country, to a large extent responsible for this.
Challenges in agro-logistics nationwide
In Colombia, the average logistics costs for a company as a percentage of its sales is estimated to reach 13.5% and in the agricultural sector, storage and transport are accountable for 69.2% of the total logistics costs. As acknowledged in the recently launched National Logistics Policy, this situation may be partially explained by the fact that 75% of rural areas are more than four hours distance from one of the 18th main cities and also 5% of these rural areas are inaccessible by land, because the country counts with 140,000 km of tertiary roads of which only 6% is paved. Furthermore, 97% of Colombian cargo (excluding coal and petrol) is transported by trucks and, as 90% of the road network is in charge of the departments and municipalities, construction and maintenance of roads is neglected due to lack of economic capacity or other priorities for the allocation of public budget.
Additionally, on the one hand, the railway infrastructure of Colombia is the worst in South America. Of the 3,417 km of railways built in the entire country, only 1,408.7 km (41.2%) are considered usable. Of the usable railways, 1,222.7 km are administrated by the governmental agency INVIAS and 186 km by private agents. According to the Colombian government, railway transport moves 23.6% of the cargo, however when excluding coal and petrol it only moves 0.1%. On the other hand, of the 24,725 km of waterways in Colombia 18,225 km are navigable. And yet, with 52 ports providing services of local and regional transport, the river transport only moved 0.1% of cargos in the country (excluding coal and petrol). Even so Colombia ranked 58th in the Logistics Performance Index of the World Bank.
The Colombian government has estimated that by doing the necessary investments in adopting multimodal transport systems, transport related costs may be reduced up to 30% with investments in railways and up to 50% with investments in waterways. In other words, exporting a container would decrease its cost from the current 2,451 USD to 1,209 USD and reduce the amount of hours from the current 136 to 77 by investing in multimodality.
The Caribbean region, leaving charcoal behind
The international trend and governmental commitments to move towards renewable energies and the subsequent phase-out of mining companies threatens the future of households depending on mining for their income. Agriculture is the prime suspect to fill the gap, which is especially true for the Caribbean provinces of Colombia, neighbours of the Kingdom of the Netherlands. The Bolívar, Atlántico and Magdalena provinces altogether have access to the Magdalena river - Colombia’s main waterway -, three of the four maritime ports of the country (Cartagena, Barranquilla and Santa Marta), international airports, and a constant flow of visitors thanks to the touristic attractions of the region.
Nevertheless, the Caribbean region ranks second in food loss, which also means there is room for improvement at the farm level production, post-harvest and processing. It’s export potential is underdeveloped. Furthermore, Cartagena (Bolívar) and Santa Marta (Magdalena) lack wholesale centrals and therefore are supplied by Granabastos in Barranquilla (Atlántico) and Mercabastos in Valledupar (Cesar), which may imply inefficiencies in food distribution. Nowadays the region produces oil palm, coffee, banana, maize, cassava, rice, sweet potato among others, and there is plenty of information available on soil suitability, water availability and irrigation infrastructure, and connectivity of rural and urban areas which can be used to develop its agro-logistics potential for both domestic and export markets beyond the US and EU like, for instance, Aruba, Curacao and Sint Maarten, which are highly dependent on food imports.
The potential development impact of comprehensive value chain solutions may, on the one hand, have a positive impact on various sustainable development goals such as food security and improving the livelihood in rural areas and, on the other hand, create business opportunities for companies not yet present in Colombia. Isolated solutions alone do not result in a sustainable business case. Therefore, an integral and integrated approach would need to start with an assessment of the logistics chain as a whole, including current export facilities and underutilized and/or underdeveloped railways and waterways. Identifying potential investment projects that could include developing consolidation centres, platforms where change of transport (from truck to rail/river), and organize a cool rail transport in the Caribbean, will improve the logistics for perishable goods and, reduce food loss and waste, improve incomes of producers and further exploit the export potential of the country.
Author: Andrés Santana