Rich-world agricultural subsidies ensure coca leaves are Colombia's only viable cash crop

With the shambolic FARC peace deal finally in place, the Colombian government is hoping to shift the country's farmers from Colombia's major cash crop: the coca leaves that are refined into the world's cocaine supply. Perhaps with the guerrillas no longer defending the crops they relied on for operating capital, Colombia can put coca behind it.

But the reality is that rich countries have depressed the price of virtually every legal crop through agricultural subsidies that make it impossible to earn a living growing staples like corn, cacao or sugar.

Combine that with the eminent suitability of coca to Andean farming — it's a native plant, well suited to the soil and climate, cultivated for centuries — and it's unlikely that Colombian farmers will give up on the crop, regardless of the law.

This is not to indict all farming subsidies, but rather to point out that the benefit to US farmers from subsidies to farmers should be weighed against the costs to the USA of fighting the cocaine trade, a ruinously expensive undertaking from the soldiers sent to Colombia to the organized crime activities in the USA to the human misery of addiction to the grotesque human and financial costs of the American prison system.

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.

Why coca leaf, not coffee, may always be Colombia's favourite cash crop
[Iban de Rementeria/The Conversation]

(via Naked Capitalism)

(Image: Colcoca02, Darina, CC-BY-SA)