Analyzing the Spatial Configuration of Agriculture: The Colombian Case

Introduction

The food industry and agricultural production have undergone a stubborn global transformation in terms of technologies, products and organizational schemes. In microeconomic terms, the predominance of commercial agriculture exacerbated greed and profit eagerness. The irruption of big capital players into the sector disrupted the production system and the conventional model of agriculture. The global new trend in the agricultural production responds to price signals moving around capitals in an international scenario. Perhaps, the differences between countries rely on the idiosyncratic production vocation and the comparative advantages. However, the agricultural exploitation model tends to follow similar trends, striving for maximizing the profits through the exploitation of intensive agriculture (Renting et al., 2003).

Figure 1.

Colombia: Commodity Export Price Index, Individual Commodities Weighted by Ratio of Exports to GDP

Source: IMF

As a component of the producers’ income, the prices indicate the fortunes of farmers. The National Planning Department (2015) states the evolution of relative agricultural prices using the ratio between the sectorial and overall deflectors. The trend in relative prices suffered two important drops: during the 1991-1996 and the 2011-2013 periods.

The upward agricultural cycle that producers are facing nowadays, is closely related to a global trend for pressures in the prices of the basic commodities and energy. High market prices make up a stimulus for the production of staple food, and contribute to mobilizing resources in the sector towards perennial crops. However, the cost structure in agriculture is likewise out rightly affected by the cost of energy, and the inputs that normally follow the same trend in international markets. Agriculture heavily demands energy directly (petroleum, gasoline), but also indirectly in the form of fertilizers, pesticides and lubricants. Therefore, the net effects on the sector can end up in a profit squeeze. Going further, the agro-industry also requires sizable quantities of fuels, mainly for the crushing of oilseeds and the milling of grains (FAO 2021).

Commodities markets have undergone disruptive transformations alongside the emergence of sizable players as China and India, and the recent conflict in Ukraine. The challenges for global producers of staple food and commodities pave the way for expansion and growth. However, the pervasive schemes of subsidies in Europe and the USA, threaten to extend further the harmful distorting effects on international commodities markets in the light of soaring prices. In the Latin American context, some neighbors such as Brazil, Peru and Chile harnessed the expansion in international markets, whereas Mexico leveraged the expansion of its internal market. The Latin American partners have recently upgraded their participation in some international niche markets, ending up as important players in global exports: Brazil as an exporter of orange juice (1^st place) and soya (2^nd place), Peru as an exporter of mango (5^th place) and asparagus (1st place) and Chile as an exporter of grapes (1st place) and apples (5th place). (Reina et al. 2011)

Agriculture has played a crucial role in the Colombian economic development in terms of employment and output, mainly in terms of pushing forward international insertion and specialization and subsequently through disparate flagship commodities, namely quina (Cinchona officinalis), tobacco, coffee, flowers and a handful of other products nowadays. During the end of 19th and the early 20th centuries coffee was the flagship export commodity, strengthening the international reserve position and enabling the international reserves to underpin the investment in other economic sectors, mainly the manufacturing activity. The current boom in the international markets intensified the specialization of Colombian agriculture. However, exceptional to some new undertakings, the overall Colombian export supply is rather scarce and undiversified. This trend led to a reduction in the sectorial balance of trade due to an unusual growth of imports, growing on average by 13% per year during the period 1991-2014, whereas the exports reported an average growth by 4.4%. (National Planning Department 2015)