Food imports are responsible for 65% of inflation: Minister of Agriculture

March 28, 2023

The Minister of Agriculture focused on the impact of food imports -15.9 million tons in 2022- on both inflation and small-scale production, during a forum on access to credit in the popular economy.

Inflación, Alimentos, Importaciones de aimentos, Inflación en alimentos, Más Colombia, Ministerio de Agricultura, Ministra de Agricultura, Cecilia López

The high inflation affecting Colombia continues to cause a stir. During the forum “Innovation and credit inclusion of the popular economy”, the Minister of Agriculture, Cecilia López Montaño, revealed a worrying statistic: 15% of what is consumed in the country is imported and explains 65% of inflation. That 15% is equivalent to 15.9 million tons imported in 2022.

The remaining 85% of what is consumed in Colombia is produced in the country, largely by small farmers, said López. For this reason, she added that “reaching the small producer and above all achieving import substitution in this small agriculture will be one of the big bets”.

You may be interested in: mascolombia.com

Together with the Minister of Finance and Public Credit, José Antonio Ocampo, López launched the CREO strategy, which seeks to place one million credit operations for small-scale productive units that do not have access to formal financing.

As explained, through the Agricultural Credit Commission, lines of financing were approved to respond to this type of popular economy. To this end, the Commission redefined what it means to be a small producer, as one whose annual income does not exceed 50 minimum wages and who has a minimum net worth. The challenge, according to the Minister of Agriculture, will be to reach them directly.

“Once they enter the development credit, they enter all the other policies, in the case of the agricultural sector, to which they have not had access. So, I believe that this is the way to increase the productivity precisely of the indigenous, peasants, Afro-descendants, of all rural producers who have gone through such difficult times”.

The announcement does not propose fundamental changes in the free trade policies that facilitate the entry of imported food, but it does focus on the impact they have on small-scale production and on the high cost of living that affects all consumers, especially those with lower incomes.

Imports: not as cheap as advertised

With the implementation of the policy of economic openness in the 1990s, and later on with the signing of free trade agreements, it was said that food imports would be a way to get cheap food.

As a result of this policy, imports went from 750,000 tons in 1990 to 15.9 million tons in 2022. This alarming figure represents 15% of the food consumed in the country, which in total amounts to 36.8 million tons, according to what Minister López stated in an interview with the newspaper Portafolio published on January 18, 2023.

However, the increase in food imports did not guarantee the inflow of cheap food into the country. What happened, rather, was that the dependency on certain products increased, and inflation in the sector was strongly linked to the ups and downs of international markets and the exchange rate.

You may be interested in: mascolombia.com

Factors such as the conflict in Ukraine, the Covid-19 pandemic -whose effects are still palpable-, the long confinements in China, and the international logistics crisis have shown that the unthinkable can happen in a world as turbulent as this one.

And when this happens, the importance of food security and sovereignty, which starts with the production of the basic diet and the most important supplies in the national territory, becomes fully valid.

Food inflation in 2022 shows risks of massive imports

A clear sign of the importance of food security came in 2022. That year, DANE certified food and non-alcoholic beverage inflation of 27.81%, well above general inflation, which was 13.12%.

Corficolombiana’s report “Food Inflation Relief 2023: Diagnosis and Prospects” identified the strong impact of imported inputs on food prices.

According to the corporation, only 12 foods -beef, milk, chicken, fresh fruits, eggs, rice, edible oils, bananas, potatoes, bread, cheese, and related products, and pork- accounted for 70% of the average annual inflation in this area.

And, when analyzing the factors that influenced their increase in price, the corporation found that the problem of high prices originated in supplies, especially urea, corn, soybeans, wheat, and seeds, which are key for the production of agricultural and livestock products.

Regarding these 12 food products, Corficolombiana explained that “although more than 85% of the total supply of these products is generated locally, their main production inputs have an imported component of more than 80%”.

For the corporation, given that “there is a high dependence on imports of these agricultural inputs, […] international price shocks have a significant impact on the production and prices of food for final consumption in Colombia”, said Corficolombiana.