Interview: Daniella Souza
What are some challenges to the growth of the agro-chemical industry in Colombia, and which areas should be targeted for development?
DANIELLA SOUZA: The agro-chemical industry saw a very weak 2016, which implies that there is an enormous opportunity for growth. Some factors that could boost the segment include continued infrastructure development to ease product distribution, further regulation and the implementation of better practices. The latter can be achieved through the implementation of Good Agricultural Practices to assure that the quality of products is up to international standards. We should also focus on the situation of small farmers who seem to be at a disadvantage because of weather conditions and an inability to set prices. This is one of the reasons why numerous people exit the sector. When small-scale producers buy agro-chemical products, such as seeds and pesticides, they must go through intermediaries which impacts their competitiveness and final prices. Revisiting the supply chain would be beneficial for the country’s agricultural sector. If Colombia wants to develop rural areas, small-scale producers will play a big role. We must help them find their own productive chain, perhaps by developing niche markets, so they are not obliged to sell to the big players. The country should look to examples like Brazil, which has developed a strong agro-industry on the back of a solid agro-chemical sector.
How should Colombia identify and foster industry-related growth to reduce dependence on the Refinery of Cartegena (Reficar)?
SOUZA: The industry shows fairly good numbers, but when further analysed sector-by-sector, the reality is that the restart of operations at Reficar is at the forefront. The way forward is to set a clear policy of prioritising key subsectors of national industry. Even if incentives or fiscal benefits – which are very welcome – are given, if Colombia focuses on boosting 20 industries, it’s difficult to develop them all. Focusing on a few key subsectors would be more productive, as we could work on the supply chains of a given subsector, specialise in it, and present it as an opportunity for investment and as the motor of growth for national industry. By focusing on areas like the food sector and building a stronger productive chain, specialisation can be achieved.
Once the sector priorities are set, companies and businesses will adapt, expand and diversify to the needs of the market. This type of growth model has taken place in the infrastructure sector, set by national and government priority, which has led to the construction of many new cement plants or additive plants. Colombia must decide on its industrial strengths and define a long-term plan of what products the country wants to export.
At what stage is Colombia’s petrochemical industry, and how can it be further enhanced?
SOUZA: The country’s petrochemical segment is characterised as a second-generation industry, meaning the value-added process happens elsewhere. A first-generation industry is where the raw material is processed locally but sourced from other parts of the globe. The Colombian petrochemical industry is customised for the country’s needs for processed materials that come from abroad. The challenge we face is access to raw materials. Even though Colombia has the potential to generate hydrocarbons by-products, availability of the resource is limited and the petrochemical industry needs a guaranteed supply. Investments in the segment are done with a long-term mindset, so we can’t depend on the fluctuations of commodity prices. Lastly, Colombia’s location is so close to the Gulf of Mexico, which is the country’s competitor in the petrochemical sector, making the task even more challenging.
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