UNEP Country Project on
Trade Liberalization in the Agriculture Sector and
the Environment
The rice sector in Colombia
19 February 2003
Geneva
Project Leader: Néstor Gutiérrez
Economic Research Director
Trade liberalization in the Colombian rice sector
Background: semi-annual crops
MOST IMPORTANT HARVESTED AREAS IN SEMESTRAL CROPS, COLOMBIA, 2001.
Ha
600,000
500,000
400,000
300,000
200,000
100,000
Source: SAC, CEGA, FEDEARROZ.
ut
Pe
an
y
le
Ba
r
ac
co
To
b
at
W
he
ns
yB
ea
So
Ya
m
tto
n
Co
um
gh
an
Be
ey
dn
Ki
So
r
s
s
ta
tto
e
Po
av
a
ss
Ca
Me
c
ha
ni
ze
d
Ri
Co
ce
rn
0
Trade liberalization in the Colombian rice sector
Background: semi-annual crops
AGICULTURAL PRODUCTS TOTAL IMPORTS (TONS), 1991-2001
(Miles Tons)
Crops
1991
2001*
Cotton
Rice
Barley
Kidney Beans
Corn
Sorghum
Soy Beans
Wheat
0.6
0.4
130.8
11.1
8.1
0.9
18.4
646.3
61.0
321.8
212.8
31.6
1,759.7
1.4
353.0
1,245.1
TOTAL
816.6
3,986.4
* Preliminar Data
Source: DNP-UDA. Rice Fedearroz
Trade liberalization in the Colombian rice sector
Background: semi-annual crops
%
COMPARISON OF PLANTED AREA, BY PRODUCT,
1990 = 100
140
120
100
80
60
40
20
0
1990
SOURCE: SAC, CEGA,FEDEARROZ.
2001
Trade liberalization in the Colombian rice sector
Background: rice sector
RICE HARVESTED AREA, COLOMBIA, 1990 - 2002
500,000
450,000
400,000
350,000
300,000
250,000
1990
1991
1992
Source: FEDEARROZ
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Trade liberalization in the Colombian rice sector
Background: rice sector
PADDY RICE REAL PRICE, COLOMBIA, 1989-2002
REAL
PRICES of 1978 / Ton
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Source: FEDEARROZ
9.290
7.959
7.336
6.889
5,824
6.785
6.192
6.270
6.636
7.042
5.946
5.485
6.331
5.741
- 38 %
Trade liberalization in the colombian rice sector
Background
• By the end of 1980’s, a unilateral openness
process was held by Colombia before Uruguay
Round. By the time, a free trade agreement
was held with CAN countries
• The rice sector had enough protection since
1994
• However, Colombian rice sector is a world
price taker
Trade liberalization in the colombian rice sector
WHITE RICE MONTHLY PRICE, 1996 - 2003
COLOMBIA
UNITED STATES
THAILAND
VIETNAM
Trade liberalization in the Colombian rice sector
Project Approach and Process
RESPONSIBLE INSTITUTION
•
RICE GROWERS ASSOCIATION-FEDEARROZ
Steering Committee
Néstor Gutiérrez, project leader, Fedearroz
Edwin García – Researcher, Fedearroz
José Levis Barón – Researcher, Fedearroz
Jaime Jiménez – Int. Trade Director, Ministry of Agriculture
Héctor Martínez – Economist, IICA
Jairo Homez – Researcher, Ministry of Environment
Diego Herrera – Economist, Universidad del Rosario
•
Stakeholders Approach – Initial project presentation, first results discussion, final paper
discussion.
•
The acceptance of this initiative has been fantastic for most of the Stakeholder participants
because of the subject opportunity when it is a broad discussion on agriculture trade topics
(WTO, ALCA, ATPA, CAN).
Trade liberalization in the Colombian rice sector
Stakeholders Committee
MINISTERIO DE AGRICULTURA
JAIME JIMENEZ – Assesor
DEPARTAMENTO NACIONAL DE PLANEACION
OSCAR BALLESTEROS – Resource Department Chief
UNIVERSIDAD DEL ROSARIO
FERNANDO BARBERI – Graduate Course Dean - Expert in International Commerce - Trade Ministry Assesor
DEPARTAMENTO ADMINISTRATIVO NACIONAL DE ESTADISTICAS (DANE)
Alejandro Pelaez Director of Sistema de Información del Sector Agropecuario y Pesquero Colombiano (SISAC)
Jaime Perez, SUBDIRECTOR
BOLSA NACIONAL AGROPECUARIA
NOHORA HELENA CRUZ – Technic Director
MINISTERIO DEL MEDIO AMBIENTE
JESUS E PEINADO – Environment Ministry Assesor
MINISTERIO DE COMERCIO EXTERIOR
ANA FABIOLA GUZMAN- Trade Ministry Assesor – Andean Integration
CIVITAS DEI (ONG)
ELIZABETH CALDERON Director
MARTHA RODRIGUEZ – Assesor
ASOCIACION DE USUARIOS DE LOS RIOS CHINA Y TOTARE (ONG)
JUAN JOSE SIERRA – Principal member, Rice Producer
COOPERATIVA DE SERVICIOS ESPECIALIZADOS PARA LOS ARROCEROS (SERVIARROZ)
ALBERTO MEJIA – President, Rice Producer
Trade liberalization in the Colombian rice sector
Stakeholders committee -2
CORPORACION COLOMBIANA DE INVESTIGACION AGROPECUARIA (CORPOICA)
IRMA BAQUERO – Main Researcher from Programa Nacional de Estudios Socioeconómicos
FRANCISCO ACEVEDO – Researcher Programa Nacional de Estudios Socioeconómicos
FERNANDO CARDOZO
FEDERACION NACIONAL DE ARROCEROS DE COLOMBIA (FEDEARROZ).
RAFAEL HERNANDEZ LOZANO – CEO Fedearroz
UNIVERSIDAD JAVERIANA
LORENA PRIETO CRUZ Economics Faculty - Apprentice
SOCIEDAD DE AGRICULTORES DE COLOMBIA (SAC)
ALEJANDRO VELEZ – Trade Director
DELSA MORENO – Agronomics Department Director
ASOCIACION DE USUARIOS DEL RIO COELLO (USOCOELLO) (ONG) ESPINAL
HENRY RAMIREZ – Management Assistant.
YESID CASTRO – Andean Community Consultor – Trade
FONDO LATINOAMERICANO DE ARROZ RIEGO - FLAR
LUIS SANINT – Director
INDUARROZ
IVAN SOMBREDERO – Manager
MOLIARROZ
JORGE ENRIQUE CUBILLOS – Manager
UNIVERSIDAD DE LOS LLANOS - UNILLANOS
JORGE ENRIQUE MUÑOZ AGUILERA Researcher
Trade liberalization in the Colombian rice sector
Project objectives
1. Enhance country understanding of multilateral trade
impact on agriculture by product
2. Develop in-country methodologies to assess the
environmental, economic and social impact of trade
liberalization
3. Carry out integrated assessments of trade
liberalization for the rice sector
4. Enhance coordination and knowledge of people
working around agricultural trade issues
5. Develop policies to correct identified negative
impacts of liberalized trade and maximize positive
ones
Trade liberalization in the Colombian rice sector
Development of In-country Methodology
• Within the steering committee discussion the
specific methodology was selected, in each specific
topic
• Ex-ante analysis, econometric models, and ex-post
analysis were used
• Indicators in socio-economics and environmental
topics were implemented
Trade liberalization in the Colombian rice sector
Methodology: Steps
• First step was an ex-post analysis about last 10 years
performance of agricultural sector response to trade
liberalization
• Second, analysis focused in the rice sector
• Third, study of Colombian trade agreements
• Fourth, socio-economic evaluation of their impact on rice
sector, we used econometrics modeling (co integration,
long term elasticities)
• Fifth, study of environmental issues related with rice
production
• Sixth, evaluation of inputs and total factor productivity
(Seemingly Unrelated Regressions and Törnqvist Indexes)
• Seventh, ex-ante analysis to evaluate 3 scenarios
Trade liberalization in the Colombian rice sector
Integrated Assessment of Impacts of Trade Liberalization and
WTO AoA
Trade liberalization had impact on rice socioeconomic variables through the increase in imports,
relative prices and developed countries subsidies.
On the environment side, it affected in the use of
low price inputs (seed) and more agrochemicals/ha
Trade liberalization in the colombian rice sector
Environmental Impacts
• It was necessary to increase mechanization and monoculture to increase the planted rice area
• Low prices induced the use of low quality seed and
more contamination of fields. The use of herbicides
and fungicides/ha increased. Besides, agrochemical
productivity decreased, and total use of these products
increased per hectare
• Mono-culture means more fertilizer and herbicide/ha
• The extensive use of agrochemicals damages not only
environment but also human health
Trade liberalization in the colombian rice sector
Social and Economic Impacts
• Low agricultural prices induce decreases in
agricultural income, planted area of
semiannual crops, and production costs (total
value/ha). They also increase unemployment
and consumption of imported food
Trade liberalization in the colombian rice sector
Valuation of the effects
Cost of trade liberalization:
•
Increase in Food Imports 388% (1990-2001)
•
Decrease in Area in Semiannual Crops 29% (1990-2001)
•
Rice real price decrease 38% (1989-2002)
•
Colombia Switched from net exporter to net rice importer
(1990-2002)
•
Average imports of rice per year around 234,000 tn (1992-2002)
•
Increase on national unemployment rate 80% (1990-2002)
Trade liberalization in the colombian rice sector
Development of Policy Package
Policies to mitigate/eliminate negative impacts of trade liberalization
•To mitigate the impact of relative prices (wheat) on rice price, it is necessary to
implement the same protection scheme of rice and the substitute products
•To mitigate impact of developed countries subsidies it is necessary to
implement a tariff system in function of production cost for the exporter
countries
•It is necessary to improve concluded agreements for a cleaner production
between growers and industry, Environment and Agriculture Ministries and
Associations
•It is important to implement a “Rice Sector Environmental Issues Guide”
under responsibility of Environment Ministry and Fedearroz.
•Some engagements relating sustainability exist inside of Efficiency Agreement
of Rice Agro industrial Productive Chain, it is necessary to accomplish them.
Agriculture Ministry, Associations
Trade liberalization in the colombian rice sector
Development of a policy package 2
• On the future irrigation projects the environmental
component must be supervised by Environment Ministry
• It is urgent to promote a diversification program on
irrigated land to avoid mono-culture. Agriculture Ministry
• It is mandatory to improve research in management
practices to decrease the use of agrochemicals. Fedearroz
• It is necessary to improve agrochemicals management
practices. Fedearroz must implement training courses, at
every level.
Trade liberalization in the colombian rice sector
Project Experience
• It was surprising to find in the substitute (wheat) prices the
connection of the colombian rice sector with the world
market
• It was interesting to set a project to show the
environmental impact of the rice activity and to know that
we have enough legislation to protect the environment, but
we do not have the enforce power to implement it
• It was the first time economists, biologists, trade
specialists, association´s leaders, producers and industry,
meet together to discuss trade related issues on an specific
crop.
• During the discussion process we found the high relevance
of environment issues on the last development on trade
Trade liberalization in the colombian rice sector
Steps Forward
Evaluate three sceneries for the mean time:
• Build 30.000 ha of irrigated area for rice + CAN
agreement (free trade: Ecuador, Venezuela, Peru)
• Build 30.000 ha of irrigated area for rice + 0
subsidies in the rice exporter countries
• Build 30.000 ha of irrigated area for rice + ALCA
agreement