The World faces a big challenge in improving agriculture and hunting sector in order to reach Millennium Development Targets in 2015. Most of countries are aware of it and they improved their FDI policy to attract resources for this sector. The most relevant success cases are Brazil, Poland, Rumania and Mexico. However, there are huge fair barriers also, for instance environmental issues and local culture against FDI in agriculture sector, therefore FDI can be blocked if there is not a global policy of awareness of the importance of FDI mainly in this kind of sectors. Colombia could face the last problem due to Congress lack of information. To put clear the point, Colombia has been opened to FDI since her independence, there are evince in 1886 Constitution, the Blue Book of Colombia printed in 1918 and the 1991 Constitution where colombians welcome FDI in this sector. But nowadays Colombia Congress ignores this fact, moreover they ignore the decreasing trend of FDI as stock in agriculture sector and hunting as a share of total FDI as stock (taking out mining and crude oil extraction FDI due to they share about 50% of total FDI), this percentage went from 57.7% in 1901 to 2.2% in 2011. Therefore, instead of blocking FDI for agriculture sector and hunting, Colombia Congress has to improve the policies to attracting this type of FDI in order to reach the global target to eradicating extreme property and hunger.
Author: Humberto Bernal,
Economist,
e-mail: zhumber@gmail.com
Foreign Direct Investment (FDI) into agriculture and hunting sector has taken relevance in the last years due to achieve the eight Millennium Development Goals where eradicating extreme property and hunger must be reached. There are evidence of increasing FDI into agriculture and hunting sector through UNCTAD-WIR-2009 report and Investment Map data. The total onward FDI as stock into agriculture and hunting sector reached US$12,152 million in 2010, it means 0.2% of total FDI as stock around World in 2010. Figure 1 shows the main countries that invest in agriculture sector and hunting abroad. Australia is one of main countries that has invested in this sector with 24.8% of total FDI as stock into agriculture and hunting around the World, there are other countries that have invested high resources to reach this millennium target such as Canada, China and the Unites States. There are countries that realized the importance about this millennium target and started to invest into agriculture and hunting sector around the World recently, they are Republic of Korea, Saudi Arabia and the United Arab Emirates. In terms of number of foreign firms the United States leads the list with 109 big firms with business abroad out of 419 big firms from other countries. The american firms abroad give 45,956 employees at least, the main american firms are Fresh Del Monte Produce Inc with 13,443 employees in Brazil, Mexico, Poland, Costa Rica and Chile in 2011 and Chiquita Brands International Inc with 20,733 employees in 2011 around the World.
Figure 1. Main source countries for FDI as stock in agriculture and hunting around World 2010
(% of total FDI stock in agriculture and hunting)
Total: US$12,152 million
Source: Investment Map (ONU).
The inward FDI as stock into agriculture and hunting sector reached US$79,594 million in 2010, it means 0.4% of total FDI as stock. The main host countries which got this FDI into agriculture and hunting sector are China with 64.3% of total inward FDI as stock into agriculture and hunting sector in 2010. There other countries that got high volumes of FDI into this sector such as Ethiopia, Argentina and New Zealand as figure 2 shows. In terms of number of firms Brazil showed the highest number of foreign firms in agriculture and hunting sector with 55 big firms, the number of employees given by these firms are 6,782 at least at the end of 2011. There are other countries which face an important number of foreign firms such as Poland, Romania and Mexico.
Figure 2. Main host countries for FDI as stock in agriculture and hunting around World 2010
(% of total FDI stock in agriculture and hunting)
Total: US$79,594 million.
Source: Investment Map (ONU).
Summarizing the FDI into agriculture and hunting sector around the World has showed an important increase due to hard work in most of counties to reach the millennium goals. Although there are problems in some cases due to environmental issues and local Law as WIR-2009 pointed in chapter III, the volume of FDI showed positive growth rates. There are no evidence of high volume of FDI to buy countries as some countries highlighted.
Agriculture and hunting FDI in Colombia
Colombia has been open to FDI since her independence, there are many official documents where colombians give the welcome to FDI such as 1886 Constitution, the Blue Book of Colombia printed in 1918 and 1991 Constitution. FDI into agriculture sector in Colombia began since XX century with United Fruit Company in banana production, investments into coffee sector and most recently investment into cut flowers and feed cattle. Colombia counts with 106 foreign firms that work in agriculture and hunting sector, it means 4.9% of total foreign firm in Colombia in 2011 as figure 3 shows. The number of foreign firms in agriculture and hunting sector showed a decline in the last 2 years but as whole picture these type of foreign firms showed a increase from 59 in 1995 to 106 in 2011.
Figure 3. Total foreign firms in Colombia 1995 - 2011
(Number)
Source: Government body (Superintendencia de Scoiedades).
The agriculture and hunting FDI as stock in Colombia reached US$108 million at 2011 prices in 1901 and US$1,546 million in 2011 what means an annual real growth rate of 2,4% between 1901 and 2011 as figure 4 shows. In terms of flows, this inward FDI reached US$156.1 million in 2011, this is the second biggest value since 1901, the first was in 1914 with US$156.5 million at 2011 prices. By 1914 Colombia faced huge investment from the United States in agriculture sector, mining and crude oil extraction. Although Colombia is open to FDI, the volume reached in agriculture and hunting sector showed a decline trend if one looks its share into total FDI as stock without FDI in mining and crude oil extraction. The share of agriculture and hunting FDI as stock into total FDI without mining and crude oil extraction went from 57.7% in 1901 to 2.2% in 2011. This result shows the lack of government policies to attract FDI in this sector.
Figure 4. Inward FDI stock in agriculture and hunting sector in Colombia 1901-2011
(US$million real prices of 2011)
Source: Own calculation with primary and secondary information.
Nowadays FDI in agriculture and hunting sector in Colombia shows lower share values that used to be at the beginning of XX century but there are more foreign firms in this sector than used to be, nevertheless most of these firms are from Panama, Cayman Islands and Bahamas, these countries are taken as Tax Heaven, therefore this FDI can show a grade of money laundry to evade local taxes. The biggest foreign firms according to sales value are International Trading Firms such as Bananos exportación S.A and firms that grow vegetables and other goods such as Agricola el Retiro.
References
A close look to FDI in agriculture and hunting sector around the World:
Conference on Trade and Development (UNCTAD). World Investment Report (WIR). 2009. Transnational Corporations, Agricultural Production and Development, chapter III, IV, V.
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