UNEP Country Project on Trade Liberalization in the Agriculture Sector and the Environment Project Leader: Néstor Gutiérrez Economic Research Director The rice sector in Colombia 19 February 2003 Geneva
Dec 19, 2015
UNEP Country Project on Trade Liberalization in the Agriculture Sector and
the Environment
Project Leader: Néstor Gutiérrez
Economic Research Director
The rice sector in Colombia
19 February 2003Geneva
MOST IMPORTANT HARVESTED AREAS IN SEMESTRAL CROPS, COLOMBIA, 2001.
0
100,000
200,000
300,000
400,000
500,000
600,000
Source: SAC, CEGA, FEDEARROZ.
Ha
Background: semi-annual crops
Trade liberalization in the Colombian rice sector
Background: semi-annual crops
AGICULTURAL PRODUCTS TOTAL IMPORTS (TONS), 1991-2001 AGICULTURAL PRODUCTS TOTAL IMPORTS (TONS), 1991-2001
(Miles Tons)
Crops 1991 2001*
Cotton 0.6 61.0Rice 0.4 321.8Barley 130.8 212.8Kidney Beans 11.1 31.6Corn 8.1 1,759.7Sorghum 0.9 1.4Soy Beans 18.4 353.0Wheat 646.3 1,245.1
* Preliminar Data
Source: DNP-UDA. Rice Fedearroz
TOTAL 816.6 3,986.4
Trade liberalization in the Colombian rice sector
Background: semi-annual crops
COMPARISON OF PLANTED AREA, BY PRODUCT,
1990 2001
SOURCE: SAC, CEGA,FEDEARROZ.
0
20
40
60
80
100
120
140
Cotto
n
Barley
Soy B
eans
Sorgh
um
Whe
at
Benne
í
Corn
Kidney
Bea
ns
Cassa
va
Potta
tos
Veget
ables
Mec
haniz
ed R
ice
% 1990 = 100
Trade liberalization in the Colombian rice sector
Background: rice sector
250,000
300,000
350,000
400,000
450,000
500,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
RICE HARVESTED AREA, COLOMBIA, 1990 - 2002
Source: FEDEARROZ
Trade liberalization in the Colombian rice sector
1990199119921993199419951996199719981999
Source: FEDEARROZ
PADDY RICE REAL PRICE, COLOMBIA, 1989-2002PADDY RICE REAL PRICE, COLOMBIA, 1989-2002
REAL
7.9597.3366.889
6.7856.1926.2706.636
5.946
PRICES of 1978 / Ton
1989 9.290
200020012002
5,824
7.042
5.4856.3315.741
- 38 %
Background: rice sector
Trade liberalization in the Colombian rice sector
Background
Trade liberalization in the colombian rice sector
• 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
THAILAND
COLOMBIA
UNITED STATES
VIETNAM
Project Approach and Process
Trade liberalization in the Colombian rice sector
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).
Stakeholders CommitteeMINISTERIO DE AGRICULTURAJAIME 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 AGROPECUARIANOHORA HELENA CRUZ – Technic Director
MINISTERIO DEL MEDIO AMBIENTEJESUS E PEINADO – Environment Ministry Assesor
MINISTERIO DE COMERCIO EXTERIORANA FABIOLA GUZMAN- Trade Ministry Assesor – Andean Integration
CIVITAS DEI (ONG)ELIZABETH CALDERON DirectorMARTHA 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 -2CORPORACION 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 JAVERIANALORENA PRIETO CRUZ Economics Faculty - Apprentice
SOCIEDAD DE AGRICULTORES DE COLOMBIA (SAC)ALEJANDRO VELEZ – Trade DirectorDELSA MORENO – Agronomics Department Director
ASOCIACION DE USUARIOS DEL RIO COELLO (USOCOELLO) (ONG) ESPINALHENRY RAMIREZ – Management Assistant.
YESID CASTRO – Andean Community Consultor – Trade
FONDO LATINOAMERICANO DE ARROZ RIEGO - FLARLUIS SANINT – Director
INDUARROZIVAN SOMBREDERO – Manager
MOLIARROZJORGE ENRIQUE CUBILLOS – Manager
UNIVERSIDAD DE LOS LLANOS - UNILLANOSJORGE ENRIQUE MUÑOZ AGUILERA Researcher
Trade liberalization in the Colombian rice sector
Project objectives
Trade liberalization in the Colombian rice sector
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
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
Trade liberalization in the Colombian rice sector
• 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
Integrated Assessment of Impacts of Trade Liberalization and WTO AoA
Trade liberalization had impact on rice socio-economic 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
Trade liberalization in the colombian rice sector
• It was necessary to increase mechanization and mono-culture 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
Social and Economic Impacts
Trade liberalization in the colombian rice sector
• 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
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
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
Development of Policy Package
Trade liberalization in the colombian rice sector
Development of a policy package 2
Trade liberalization in the colombian rice sector
• 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.
Project Experience
Trade liberalization in the colombian rice sector
• 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
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
Trade liberalization in the colombian rice sector