The Colombian Caribbean: A sea of opportunities for Dutch agrologistics solutions

Despite of the huge agricultural potential and various competitive advantages, Colombia has not been able to completely unlock it. Colombian cities maintain a steady growth both in size and population, hence demanding agricultural production of higher quality and quantity. Domestic and international trade of agri-food products in the country require an enabling set of infrastructure and logistics solutions.

Commissioned by the Embassy of the Kingdom of the Netherlands in Colombia, Resilience BV conducted this study aimed to analyse and present the current situation and bottlenecks of the agro-logistics sector in the five northern departments of Atlántico, Bolívar, Cesar, La Guajira and Magdalena, as well as business opportunities for (Dutch) stakeholders that could help to solve them. The results are presented through a report, a short document presenting 6 business cases and an infographic, available for download at the bottom of this article.

State of affairs and bottlenecks in the Colombian agrologistics sector

Colombia has a handful of flagship agricultural export products (banana, coffee, palm oil, avocado) and is already a big player in the agri-food products’ global trade. Still, it has potential to provide the world market with many more. Meanwhile, around one third of the food produced in Colombia is either wasted or lost, with important economic, social and environmental consequences. The internal logistics and infrastructure are in need of improvements, while the external operations are suffering by the pandemic-led global logistics crisis. The study led to the following findings:

  1. Insufficient local production reflects both challenges and a growing demand. Despite their overall suitable environmental conditions, most of the food consumed locally is not produced in the five regions focus of the study but transported from other departments. Small and medium-sized producers are the ones experiencing lowest levels of technification and technical assistance. Similarly, producers often lack market and entrepreneurial knowledge and the levels of formality and associativity are low. Unsurprisingly, all regions complain about the high costs of agricultural input. Likewise, limited access to finance poses a barrier for farmers to invest in technologies that could help them increasing productivity and/or quality of the produce, while moving away from unsustainable practices.
  2. The distance is very long from farm to table. On average in Colombia, 72.5% of rural areas are located at more than 3 hours from main cities. In the ‘producer to consumer’ phase, the issues lay in a too high number of intermediaries, bad state of (tertiary) roads, difficulty to reach farms, low availability and high costs of transport and consequent low or even lack of value capturing by producers. Since most farmers do not have own means of transportation they must rely on middlemen that facilitate transport to markets. Due to the numerous risks (such as accidents or lootings) and high (transport) costs the intermediaries are bearing, they add a substantial margin on their sales prices. This creates a large gap between the farm gate price and the market price, often regarded as unfair to the farmers.
  3. High dependency on roads transport. The internal logistics and infrastructure of Colombia need improvements. The bad state of tertiary roads and the high price and low availability of transport options reduce farmers’ chances to bring their produce directly to markets. Fluvial transport of agricultural commodities is not developed, given the economic advantages only come into play when handling high volumes. Similarly, at the current conditions and existing extension in the country, railways transport is not an option for agricultural products, especially when perishable.
  4. Export is challenging on all levels. Colombia exports mainly to countries in Europe and North America. High (and increasing) costs for small producers (incl. bureaucracy and implications), hence low value retention, and increased shipping costs (vs stable sales price) were identified as the main bottlenecks to export. To sell their produce abroad, farmers need to be certified by the competent authorities depending on the type of product, i.e. ICA and/or INVIMA. This implies, on top of the required documents to be handed in, that production and/or transformation infrastructures comply with certain requirements. The region of the study hosts three of the four main ports for Colombia which struggle with internal coordination challenges. Ports and authorities often have difficulties coordinating the different inspections and bureaucratic operations needed, such as those from the anti-narcotic police, the ICA and the douane agency. Although having a privileged position for exports towards the Caribbean islands, specifically in the case of the Dutch Antilles, the potential is not fully exploited as shipping to the islands is too expensive, mainly due to the very low volume of imports back to Colombia. The study produced a roadmap to help understanding this situation and identifying opportunities:
Beeld: © LAN Bogota

A Caribbean Sea of opportunities

The study identified four main business cases, briefly presented below. In addition, (tertiary) road improvements and solutions for integrated transport and logistics between Colombia and Dutch Caribbean have also been suggested as interventions that will benefit the sector. In the final report, each opportunity is further elaborated.

  1. Mango processing: The Magdalena department is the fifth mango producer in the country with an annual production of 74,000 tons. However, it also experiences large losses of the fruit, up to 8,000 tons. This is mainly due to a lack of buyers and processors of the fruit. Processing is an option to not only reduce or avoid food loss (and possibly waste), but also to add value to the fruit. The European and global markets for mango puree are growing at rates of 5-7% and 8.7%. We estimate margins of 20-32% with a payback period of 4 years. In addition, mango seed oil (or mango butter) could be a by-product of such processing.
  2. Organic cashew production and processing: Colombia’s cashew production is limited, however has an enormous potential thanks to the clonal varieties developed by Agrosavia. These can reach yields of 1900 kg/ha, against a national average of 300 kg/ha, a national maximum (in Vichada) of 900 kg/ha and a global average of 600 kg/ha. Agrosavia also identified the Colombian Caribbean as the most promising area to grow cashew in the country. To compete on the cashew kernel market, large production and processing volumes are needed. This study identified the business case in planting 8,000 ha and establishing a factory with processing capacity of 40 tons/day. Production of cashew nuts in less extensive plantations also secures a business case, as unshelled cashew nuts can be exported to countries with large scale processing capacities. When starting an organic certified cultivation line (rather easy in the case of cashew), margins can be also higher. This business case gives the opportunity to become the frontrunner of the Colombian cashew production.
  3. Solutions for increased efficiency in small scale productions: Seventy percent of the fruit and vegetable consumed by Colombians is produced by smallholders. Farmers are dealing with ever-growing prices of agricultural inputs, while farm gate sales prices struggle to follow the same trend. In addition, climate change is affecting cultivations across the world, impacting, amongst others, crops’ seasons, productivity and needs. For this reason, solutions that can help increase their efficiency and sustainability are important. These could be, for instance:
  • Training and piloting of own production of organic fertiliser by use of fresh manure. Chicken manure is suitable as the volumes needed are limited, and there is no need for drying to produce fertilisers such as ‘manure tea’.
  • Adoption of smart farming solutions, such as apps. These can provide on- and offline agronomic support, also supported by satellite data, two-way SMS services, and at the same time data collection and analysis, market data, peer to peer communication.
  • Adoption of soil humidity sensors. They measure the moisture level at different depths in the soil and give out three results (with different coloured lights): too humid, good humidity, too dry. Benefits include water savings, optimization of resources for agricultural production, and financial savings (water costs reduction combined with increased efficiency of diesel-powered irrigation pumps), on top of reduced emissions (from the same irrigation pumps).
  1. Organic waste transformation: Currently, 34% of food produced in Colombia and destined to human consumption is lost or wasted. More than one third (40.5%) of the total losses and waste occurs at farm level, followed by losses in the distribution phase (20.6%), the post-harvest and storage phase (19.8%) and the consumption phase (15.6%). While integrated solution to prevent and reduce losses should be universally undertaken, and while food losses at each stage require specific interventions, there are solutions that allow to recover part of the value of the food lost. An interesting solution is anaerobic digestion of mixed organic waste, that results in an energy component, typically biogas (that can be then converted to electricity and residual heat) and a leftover product, a de-facto fertiliser. Anaerobic digestion systems are an excellent solution to integrate in places with constant flow of (mixed) organic waste, such as markets and distribution centres. They require a considerable investment, that is however balanced by substantial cost savings from utilizing the energy produced by the system, and revenues from the fertiliser sale. On the financial side, the factors to be considered when evaluating the business case are (1) the cost of waste disposal, (2) the cost of electricity and (3) the cost and cost/price of fertiliser.
Beeld: © LAN Bogota