Promotion and protection of the agricultural sector
Bill 126-2017 // Bill 028-2016 // Draft Decree // CNCA Resolutions 7 and 8
In the last quarter of the year, the Colombian government published the Bills that we discuss below, with the main objective of promoting and strengthening the country's agricultural and livestock sector.
Smallholding economy and family-run farming
The Government’s Bill 126-2017 seeks to promote and consolidate the smallholding economy and family-run farms, as well as strengthening integrated rural development. The document proposes two associative systems, specifically:
- The smallholding economy understood as an economic, social and territorial system that is environmentally sustainable; one that is managed and operated by smallholders using their family, community and organizational hubs whose principal source of income is agriculture, forestry, small-scale fishing, aquaculture, pastoral activity, livestock, silviculture and handcrafts to at least 75%.
This system’s aims include self-sufficiency, the formation of associative and cooperative production and trading methods, transforming and adding value to their products, generating surpluses that can be marketed locally, regionally, nationally and abroad; protecting ecosystems, as well as the recognition, affirmation and boosting of smallholders’ cultural identity and connections to their land.
- Family-run farming as a socioeconomic and cultural system used by agrarian communities, whether these are smallholders, colonies, indigenous people, or of other kinds, in their respective territories, occupied in farming, livestock breeding, silviculture, aquaculture or fishing. They are run and manned predominantly by family labor or by a community of rural families, some of whom own the land, while others do not, while some have larger plots than others. The heterogeneous nature of this relationship with the land and their production system allows them to be partially self-sufficient, while generating income by trading on local, national and international markets, whether sporadically or continuously, in search of a stable lifestyle to give them food security both for themselves and for society.
These systems allow production and trading arrangements to be set up that are based on association and solidarity, protecting ecosystems and affirming cultural identity, among other aims.
Other matters covered in the Bill:
- FINAGRO’s role of financing of eco-farming production reconversion processes.
- Measures to strengthen the smallholding economy and family-run farming’s productive capacities, in areas including:
- Diversification of production units.
- Food quality.
- Soil suitability.
- Forward planning of land use.
- Application and use of technology and resources appropriate to the type of production.
- Transitioning to agro-ecological systems, with the support of specialized experts.
- Ways and means of accessing loans.
- Provision of production infrastructure.
- Marketing that is appropriate for the goods being produced.
- Mechanisms for business training.
- Creating the Smallholders’ Economy & Family Farming Information System, into which the territorial institutions provide feedback. The system seeks to identify the smallholding population that is active in this economy and in family farming in order to target the policy instruments cited above appropriately.
- Incentives for people registered in the Smallholders’ Economy and Family Farming Information System who will receive, at least, incentives such as the creation of a special line of credit through FINAGRO at a preferential lower rate of interest than the lowest market rate to finance their projects, procure technology and equipment for the purposes of the Smallholders’ Economy & Family Farming. These loans will enjoy a grace period to be regulated by the Government so that the installment payments can be scheduled for when resources are available from the harvest.
The Bill also states that the Ministry of Agriculture will have to present research on barriers to accessing credit suffered by those affected by the law, and will set up, in conjunction with the Colombian Financial Authority, the SFC the regulations needed to overcome the obstacles that have been found.
Advantageous conditions for small agricultural and livestock producers
The first debate of the bill to provide advantageous lending conditions for small agricultural and livestock producers, set interest rates and create a loan guarantee system, has been tabled in the House of Representatives of the Republic of Colombia’s Congress.
Since the first draft, the scope of these conditions has been restricted to exclude medium-sized producers and will only benefit small producers.
However, it retains the earlier clauses relating to:
- Conditions over the debt portfolio purchase that the national government would carry out with the entire financial system, which is still up to 50%, and a grace period for the balance of 1 year and an interest rate of DTF [Colombia’s rate for 3-month fixed rate deposits]
- Credit facilities for small agricultural and livestock sector producers:
- To keep production schemes going: term of up to 3 years, 1-year grace period and DTF interest rate
- To set up production schemes: term of up to 10 years, depending on cash flow, 3 years’ grace period and DTF interest rate
- Surety from the Agricultural and Livestock Guarantee Fund on these loans
- Authorization for the SFC to define the mechanism for eliminating these non-paying debtors from the data bases
The Colombian Government has put out for public consultation a draft decree that would enable the adoption of the Review, Assessment & Monitoring Plan for programs and legislation supporting rural women.
To ensure correct compliance with this Plan, the government intends to create an Inter-Institutional Tracking Committee to coordinate the different sectors involved. Several ministers and representatives from indigenous groups, such as the Raizal and Palenquero communities, Afro-Colombian women, subsistence farmers and LGBTI will make up this committee. Their functions, among others, will be: i) to amend or make adjustments to the Plan, ii) publicize and monitor public policies to help rural women, and iii) recommend strategies for rural women, as established by international bodies.
This Inter-Institutional committee will be supported by an Operations Committee and a Technical Secretariat.
Final beneficiaries of agricultural and livestock loans
Finally, we should refer to resolutions 7 and 8 published by the National Agricultural Credit Committee (CNCA in the Spanish), which make changes to the regulations on the use of farming and rural loans, that particularly affect the current conditions of associations.
In those resolutions, the requirement for eligibility of having been signed up to or linked for two years with a cooperative or association has been eliminated, in the case of individuals wishing to access the interest rates offered under these schemes. In compliance with resolution 7 cited above, the agricultural and livestock sector financing fund, FINAGRO, has made changes to its Service Manual outlined in its Regulation Circular P-18/2017 affecting loan eligibility requirements for associations, eliminating the obligation to have been signed up or linked for two years with a cooperative.
In addition, there is a rediscounting facility to purchase new machinery to modernize the agricultural sector with the latest technologies, to replace the obsolete machinery still used in farming. The interest rate on this rediscounting facility can be subsidized for beneficiaries over terms of up to 8 years with one year’s grace period, on portfolio balances up to COP100 million, and is covered by the Agricultural and Livestock Guarantee Fund.