While negotiations continue between the Santos government and the FARC, potato farmers in the countryside went on strike. This comes in the wake of the widespread protest movement staged by the small coffee growers some weeks ago. The underlying cause for the 120,000 potato-growers’ protests in the areas of Boyacá, Cundinamarca, Nariño, and Antioquia is the decline of the agricultural sector due to cheaper potato imports from the United States, Europe, Canada, and Argentina. Twenty thousand metric tons have been imported thanks to the economic liberalization policies and the Free Trade Agreements that the Colombian state has signed with the United States, Canada, and others.
There are a number of factors that have contributed to this crisis, chiefly the Dutch Disease that is affecting two of the country’s most productive sectors: agriculture and manufacturing. The Dutch Disease is the result of the windfall of revenues that distorts manufacturing and agricultural production for sale on the global markets by increasing the price of the local currency. In Colombia’s case, the rapid growth of the extractive sectors (oil, coal, gold, nickel, and emeralds) and foreign direct investments associated with these sectors and with bio-fuels and ethanol production have consolidated the grip of the Dutch Disease on the political economy. The appreciation of the peso against the dollar and Euro increased the costs of production including labor and land rents this is compounded by the lack of economies of scale and mechanization, as is the case of the small peasant and medium production.
Effects of the Dutch Disease can be seen in Cundimarca, where labor is scarce due to the availability of jobs in the extractive sector. The higher rate of mining activity in Cundinamarca impacts wages for agricultural workers, as the industries compete for labor. For example, in Nariño, an area with less robust extractive sector, labor costs constitute only 25.1% of the costs of potato production, while in Cundinamarca, labor accounts for 37.5% of production costs.
The Dutch Disease also applies to the price of land, which has increased due to the expansion of mining concessions combined with speculative land investments made by local and international entrepreneurs, including the narcobourgeoisie.
In Europe or Argentina the average costs of producing one kilo gram (kg) of potatoes is between 15 cents to 19 cents respectively—while in Colombia it costs 25 cents. This puts local small and medium sized producers at a great disadvantage. While the Santos administration did concede to provide a meagre $22 million in assistance falls short from solving the problem. It is just a band aid that does not address the root-cause. This band-aid solution is similar to what was previously offered to the coffee growers some weeks ago. This strike and other protests are expected to follow suit are revealing that the lethal combination between a rentier model of capitalism and trade liberalization without safety nets and policies designed to protect local production.
If these misguided trade liberalization policies instituted in an unequal world capitalist economy persist, they will transform Colombia into a net importer of food. A process that started in earnest with an exponential increase in its food imports during the last decade has undermined food security. Against this backdrop of protests and food insecurity one crucial factor one has to consider for contextualization. The rural economic crisis and resulting protests are happening at a historical juncture in which the country is attempting to transition from war to peace. Given the growing nature of the rural economic crisis reveals that the current political economy underpinned by neo-liberal orthodoxy and a rentier-extractive model cannot sustain the underpinnings of a durable peace. This crisis appears to be just another bubble waiting to explode.
Nazih Richani is the Director of Latin American studies at Kean University. He blogs at nacla.org/blog/cuadernos-colombianos.
