27/04/2015 - Structural reforms and policies that support long-term competitiveness would ensure that Colombia’s agriculture sector contributes to more sustainable and inclusive growth, according to a new OECD report.
OECD Review of Agriculture Policies: Colombia 2015 underlines the importance of increasing strategic investment in human capital and in physical infrastructure, while reinforcing the agricultural innovation system and removing significant deficiencies in the land tenure system.
“Agriculture has traditionally been of key importance to the Colombian economy, providing major contributions to GDP, employment and exports, but the farm sector faces deep challenges looking forward,” OECD Trade and Agriculture Director Ken Ash said during a launch event in Bogota with Colombian Minister of Agriculture Aurelio Iragorri Valencia.
“Addressing current weaknesses in the agriculture sector will require a broad reform of agricultural policies and institutions, to strengthen land rights and land access, to refocus policy efforts away from ineffective price and input support to strategic investments in people, infrastructure, and innovation. Building a comprehensive enabling environment for the agricultural sector will do more to help farmers prosper.”
Farming remains a key component of the Colombian economy, despite a reduction in its share of GDP, from 16.5% in 1990 to 5.2% in 2013, and employment, which decreased from 26% in 1990 to 17.5% in 2013.
The agriculture sector suffers from high levels of poverty and income inequality, with a large number of smallholders producing mostly for their own consumption and a smaller number of large-scale commercial farms accounting for a high share of output. Removing the distortions in the current system of taxes and transfers would encourage more productive land use and contribute to more widespread growth.
The Review notes that illicit crop production, together with armed conflict, has constrained sustainable agricultural growth. As more than 40% of land ownership continues to be informal, Colombia should improve the land tenure system through access to land, land restitution and formalisation of land rights.
Government support to agriculture, measured by the OECD Producer Support Estimate, averaged 19% of farmers’ gross receipts over the 2011-13 period, the same level as for the 34-country OECD. Over 80 % of this support is in the form of Market Price Support (MPS); that is, domestic prices that are held higher than world prices through the use of import restrictions, such as tariffs. MPS raises prices for poor consumers, is relatively inefficient in transferring income to producers and distorts production decisions and trade. The Review proposes reforms to improve the efficiency of public support to farmers and consumers alike.
The Review also suggests reforms to strengthen the competitiveness of Colombia’s agricultural exports, which currently represent approximately 11% of total Colombian exports, but which are in decline. In particular, the Review calls for strengthening the ability of Colombia’s farmers to meet sanitary and phytosantary standards in export markets.
The OECD also recommends that Colombia reassess the framework for public and private investment in agricultural innovation. The use of technology is low, the quality of training and other technical support for farmers can be greatly improved and much more can be done to attract further private investment.
Finally, the Review recommends that Colombia strengthen the institutional framework for designing and implementing agricultural policies. Moving towards a more comprehensive and coherent system of monitoring, analysing and reporting on agricultural policies will help track and improve policy performance.
For further information, journalists should contact Dalila Cervantes-Godoy, Agricultural Policy Analyst, Development Division, OECD Trade and Agriculture Directorate, or the OECD Media Office (+33 1 4524 9700).
***NOTE TO EDITORS***
The OECD Review of Agriculture Policies: Colombia feeds into the country’s ongoing OECD accession process, which was launched in October 2013 in Bogota during a visit by the Secretary-General, on the basis of the May 2013 decision by the OECD Council to open accession discussions with Colombia and Latvia.
Colombia is now working through an Accession Roadmap, which sets out the terms, conditions and process for its accession to the Organization. The Accession Roadmap calls for a series of in-depth reviews conducted by 23 OECD technical committees, which, in turn, will provide a formal opinion to the OECD Council on Colombia’s willingness and ability to implement OECD standards and of its policies and practices as compared to OECD best policies and practices in the relevant area.
These reviews are seen as an opportunity to support the Colombian authorities in pushing forward reforms in line with OECD standards and best practices. There is no set timeline or end date for the accession process, and progress made ultimately depends on the ability of Colombia to respond to recommendations made by OECD committees, formed by its Members, in order to successfully complete the technical reviews.
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