Interview: What are the economics behind Colombia’s agrarian protests?

A wave of agrarian strikes and protests have gripped Colombia over the past several weeks.

Farmers, truck drivers, students and other protesters from the countryside to urban centers like Bogota and Medellin have denounced President Juan Manuel Santos’ economic policies, saying that Colombia’s free trade agreements and neoliberal economic policies are hurting farmers.

During the protests in Bogotá last week, a potato grower named Benjamin Morales said “we’re broke because we’re facing high prices in everything from fertilizers, fungicides, pesticides… These products have too many taxes, too many tariffs.

“And about the issue of the FTAs… we’re importing a lot of milk, a lot of cheese and domestic production has fallen,” added Morales.

“It’s the same as [the problem coffee farmers are facing]: fertilizers and pesticides are too expensive, and when we go to harvest, the price is too low. And we don’t receive any kind of subsidy. Coffee growers do. But we don’t.”

I interviewed Economist Mauricio Reina, who is a researcher at Fedesarrollo. Fedesarrollo is a Bogota-based non-partisan think tank that develops research and analysis on economic and social policy in Colombia.

I asked Mr. Reina questions about why farmers are angry, and what economic foundations underlie the agrarian crisis. This is the interview transcript:

W. Tomaselli: It seems like there’s a paradox here: the potato farmers are shouting that the products that come from abroad are pushing down their prices and they can’t compete. They’re upset. But other economists I’ve spoken with say that isn’t an issue that has to do with Colombia’s Free Trade Agreements. They say it’s an issue of productivity. Colombia doesn’t have the productivity to reach the domestic demand in Colombia. But doesn’t that mean that food imports are competing with farmers to reach that demand?

M. Reina: The first thing you’ve got to keep in mind is that the products that protesters are complaining about are imported, but they’re imported at a low level in comparison to the national level of production. In the first place, Colombia only imports frozen potatoes, not fresh potatoes, and that’s from years ago… and this [frozen potato] product doesn’t compete directly with the farmer in the small towns of Colombia. It competes in big urban supermarkets, which in some cases could affect the small farmer, but in the majority of cases doesn’t.

W. Tomaselli: You said it’s a low level of imports coming into the country. How much food is imported into Colombia compared with domestic output?

M. Reina: Yes, it’s really important to look at the size of imports. If you look at frozen potatoes, they accounts for less than 1% of the production of potatoes [in Colombia]. In other words, if a sector goes into crisis with an added 1% of imports, it’s a sector that has serious problems with productivity. It’s not a sector that has problems with free trade agreements or international markets or competition from abroad. It’s a sector that has major problems with productivity.

W. Tomaselli: Can you talk about another example of how this works?

“When you look at the case of milk, milk is imported [into Colombia] as powdered milk. And what happens is more or less what happens with potatoes – it competes with a part of the market, but not with all the milk [Colombia produces]. While more farmers produce regular milk, powdered milk doesn’t compete with them that much.

But in any case, let’s suppose that it were regular milk. Milk that [Colombia] imports accounts for less than 3% of total national production. So a sector that goes into crisis as it sees 3% of imports come into the market is a sector that has serious productivity problems.

In the case of rice, imports don’t even reach 5%. The problem is the domestic sector, not the international market.

W. Tomaselli: Ok, so my question then is if it’s not the free trade agreements, and it’s not about competition from the international market, then what’s happening? Why is there a crisis in the agricultural sector then?

Well, the Colombian agricultural sector has historically been very isolated from the international market by a very protectionist policy. What that means that a sector that has kept out international competition will not have experienced advances in productivity during the last couple decades.

This kind of protectionism has had two different kinds of effects on two different groups of producers.

Colombia’s protectionism has been driven by the big landed estates who have major political representation in the country, and who have very solid backing in congress. So cattle ranchers and rice growers are the types who have searched for protectionist schemes. They’re powerful on a local level. They’re powerful on a political level. And they guarantee that competition from the outside doesn’t enter.

But meanwhile, there are small farmers whose crops don’t compete much with the large landed estates like the rice growers and cattle ranchers. They [grow] fruits, vegetables, the whole line of tropical products – all of these types of farmers haven’t succeeded in gaining influence in the Colombian political arena. Colombia’s agrarian politics have listened to the large landed estates about protecting their economies, but they don’t bother with promoting small farmers’ crops. And those crops, in many cases, are crops that Colombia could export. 

So the central problem here is the protectionist policy that big landed estates promote. It favors the big estates, but it doesn’t favor the small farmers. In any case, it’s resulted in lower development of productivity.

Two additional things to paint the whole picture: first is the whole matter of insecurity in the countryside. We’re starting to slowly approach more security in the countryside. But don’t forget that for half a century, we’ve been dealing with this problem.

The second thing is infrastructure. As the agricultural sector has been so closed, there hasn’t been a need to develop better road infrastructure in order to be able to export and send out product to the international market.

So nowadays, a small farmer can’t find incentives for stockpiling, he doesn’t have resources for commercialization, and he doesn’t have mechanisms for organization in order to face international competition.

We’ve created a closed economy with bad infrastructure. And nowadays, those are the problems that we are suffering from.

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