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Why coca leaf, not coffee, may always be Colombia's favourite cash crop

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Colombia’s current peace process is facing numerous challenges. In a country that has suffered the worst impacts of the international drug war, one main dilemma is this: what to do with rural regions which have specialised in producing coca leaf, the main ingredient in one of the world’s most lucrative products?

For 35 years, the international cocaine trade has made drug cartels rich and helped fund and expand the activities of the FARC guerrillas throughout Colombia’s most remote areas. Even as the three-year peace negotiations were underway, coca cultivation in Colombia increased by 39%, from 69,000 hectares in 2014 to 96,000 in 2016.

Colombian coca growers have not benefited from the cocaine trade in the same way, of course. They remain, for the most part, poor farmers. But coca leaf, or hoja de coca, has provided a livelihood for thousands of families for generations. How can Colombia’s government move them out of this market while demobilising the guerrillas that once controlled coca-producing areas?

One of the least controversial proposals in the FARC peace accords is the idea of crop substitution and alternative development in these regions. With support from the government and the UN, some 100,000 families in the Nariño, Cauca, Putumayo, Caquetá, Meta, Guaviare, Catatumbo, Antioquía and Bolívar provinces would begin to grow cacao, coffee or honey instead of coca.

This sounds good in theory. But in practice it’s an extremely complicated proposal because of the uncomfortable truth about international agricultural markets: only in illicit ones are poor local producers able to sell their product for a price that actually covers the cost of inputs: land, labour and capital.

In a globalised world, illegal crops such as coca, cannabis and poppies are poor farmers’ rational response to the ruinously low prices of imported subsidised farm products.

Farm subsidies distort the agricultural market

Governments pay agricultural subsidies to farmers and agribusinesses to supplement income, manage the supply of agricultural commodities, and influence the cost and supply of commodities.

Though many countries use this economic policy, subsidies are most significant primarily in the rich world. According to data from the Organisation for Economic Cooperation and Development (OECD), in 1986 such financial assistance amounted to US$41 billion in 2014.

The corn market, for example, is highly subsidised. From 1979 to 1992, OECD nations’ subsidies for maize producers increased from 28% to 38%. In the US, the market price for corn stayed steady at about US$2.50 a bushel during this 13-year period.

Neither Colombia nor other Andean countries could afford such subsidies, meaning local producers couldn’t compete with low-cost imports. In Colombia, the market cost of corn dropped about 20% from 1979 to 1992; coffee, cacao and sugar prices plummeted even further.

The relationship is not linear, but it’s real: in 2002 the FAO acknowledged that rich-country farm subsidies hurt producers in the developing world. They allow farmers and agrobusiness to distort the market by offering cheap commodities that sell for less than the cost of production, eliminating competition from producers in poorer countries.

It’s no coincidence that major Andean coca cultivation also began when rich-country farming subsidies increased. From 1980 to 1988 in Bolivia, Colombia and Peru the area dedicated to coca growing rose from 85,000 hectares (99,000 metric tonnes produced) to 210,000 hectares (227,000 metric tonnes produced). Production has since stabilised at around 157,000 hectares, producing some 170,000 metric tonnes of coca leaf.

Coca cultivation, in short, is just one part of a revolution in the global agricultural trade in which traditional roles of producing countries and consuming countries have been inverted. In 1977, developing countries were running a trade surplus of US$17.5 billion with developed countries; by 1996, that surplus had become a deficit of US$6 billion with the rich world, according to the UN Food and Agriculture Organisation.

The rationality of coca

In such a system, illicit crops became one of the only ways for many farmers areas to make a decent living.

The international experts who promote alternative development as the solution for Colombian coca seem to be forgetting or avoiding this fact. For markets to be effective – whether legal or illegal – they must provide proper remuneration of input costs. If the price of goods is below the local production costs, that business model will necessarily fail.

Peasants cannot renounce the higher coca-farming income that supports them and their families, any more than they can change where they live, or the water, weather or soil conditions of the Andean region. Coca is also an ancestral Andean plant with centuries of use by local populations – a non-negligible factor in its enduring appeal.

These questions are part of what has driven the “fight for the land”, the rural bloodshed, the paramilitaries and guerrilla violence that has plagued Colombia for the past 52 years.

This is not to discount alternative development entirely. Comprehensive rural development projects that help local populations gain access to basic needs (potable water, housing, communications and urban infrastructure) and social services (health, education and recreation) are necessary for local communities, whether they grow legal or illegal crops.

But the central strategic problem of crop substitution remains the slim profit margins for legal products such as coffee, honey and chocolate. Until the international agricultural market solves its subsidies problem, coca leaf will always be Colombia’s best cash crop. It raises the question: what if coca were legal, too?

The ConversationIban de Rementeria is affiliated with the Red Chilena de Reducción de Daños (Chilean Harm Reduction Network).

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