Trade deal with U.S. could harm Colombia farmers

BOGOTA - Colombia promised that a free trade agreement with the United States will create jobs and stimulate the economy, but farmers in the Andean nation fear their livelihoods are at risk and they will become prey of large U.S. agribusiness.

The government said the accord, which came into effect this week, will add as much as 1 percentage point of growth to the economy and trim two percentage points from unemployment. Small-scale farmers, however, fear that the local market will succumb to cheap U.S. exports and that thousands will lose their jobs.

"This deal will fuel growth as it has happened in other countries that have signed accords with the world's largest economy," trade minister Sergio Diaz-Granados told Reuters.

Under the deal, almost all the products that Colombia exports to its largest trade partner will gradually have duty free access to the United States. U.S. shipments represented nearly 40 percent of Colombia's total exports last year.

Textile, leather, cocoa, tobacco and jewelry producers stand to benefit from the Free Trade Agreement, or FTA. But the flip side of the deal is that thousands of small-scale Colombian farmers - including poultry, cattle, dairy, grain and bean producers - will come face to face with large U.S.-based agribusiness.

A study by several economists published by local rights organization Planeta Paz concluded that the Colombian market will be swamped with cheap U.S. food products.

"We expect a reduction of crops and job losses in yellow corn, sorghum, wheat and beans in the short term," the study said, noting that about 1 million farmers would see their income cut between 31 percent and 45 percent because of the FTA.

Colombia, which is expected to grow strongly in the coming years, will surely become an enticing market for U.S. food exporters. The FTA stated that the U.S. can send Colombia up to 2.64 million tonnes of food products free-of-duty in the first year under quotas that would increase gradually.

Even some members of the government of pro-marketeer President Juan Manuel Santos acknowledged that the FTA signed by the previous administration may be a liability for farmers.

"The agriculture ministry disagrees with many of the things that were negotiated ... but now we must comply with the FTA," agriculture minister Juan Camilo Restrepo said earlier this month.

Trade groups say some 700,000 farmers are at risk of losing their jobs in the next five years, as local producers would succumb to a flood of cheaper U.S. products.

Higher rural unemployment could be a blow to President Juan Manuel Santos who has pledged to cut unemployment to one digit by 2014 from 10.4 percent at present.

The lack of opportunities in the countryside has been one reason many youngsters joined armed groups such as the Revolutionary Armed Forces of Colombia. Underdevelopment in rural areas has been one of the government's biggest challenges.

To protect rural jobs, the agriculture ministry earmarked 1 billion Colombian pesos ($571 million) to boost crop yields, improve livestock genetics and overhaul farms.

"We're going to give resources and support to the most threatened sectors to prevent job loses," Restrepo said.

CATTLE, RICE, DAIRY, POULTRY

About 370,000 ranchers could be forced to close shop because they may not be able to compete with large-scale beef producers in the United States, said Jose Felix Lafaurie the head of the cattle association.

"Colombia will suffer the same fate as Mexico," where he said thousands of cattle farmers lost their jobs after the North American Free Trade Agreement came into effect.

Dairy, rice and poultry producers are also at risk, according to agriculture trade groups and economists.

Fedearroz, the federation of rice farmers, said thousands of growers may not be able to compete with U.S. rice exporters and will need government subsidies to stay afloat.

Poultry farmers also face a flood of cheap chicken imports.

"They sold us the idea that the FTA was a two-way deal, but I cannot compete there ... I cannot export chicken to the United States because of phytosanitary restrictions," said Andres Moncada, director of the association of poultry producers.

Even if farmers succeed in sending their products to the United States they will have to face another challenge that is outside their control. The Colombian peso has strengthened around 7 percent this year, cutting into the revenues of flower, coffee and banana exporters, and it may continue to rise.

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