Irresponsible Credit Policies Devastate Colombia’s Agricultural Sector

On December 20, while rural businessmen were preparing to enjoy Christmas and the New Year, the members of the National Agricultural Credit Commission approved what would be the most disastrous credit policy for their sector.

This governing body for agricultural credit policy, which in the past was a kind of board of directors of the Banco de la República for the agricultural sector, turned it into a committee of bureaucrats who play at being Creole Wall Street bankers, improvising with policies credit for the agricultural sector. This is what happened in the last session in December, when they took several absurd and crazy measures that ended up leaving most of the agribusiness, rural communities, and farm producers out of the financial system. Let’s take a look at some of those irresponsible decisions.

In Colombia, large food stores and grain, dairy, oil, sugar, snack, fruit drinks, balanced food and meat industries, among others, require large credit resources to buy production or crops from field producers. . A single rice mill, for example, requires around 600,000 million pesos a year in credits to buy rice crops. Well, the delegates of the National Credit Commission came up with the foolish idea of ​​putting a debt limit of $10,000 million, due to Finagro’s development lines. The result could not be worse. Six months later, agricultural credit fell by -17.35%. Between January and June of this year, placements fell by $2.4 trillion compared to the same period in 2022.

Due to this absurd restriction, commerce and agribusiness could not deliver crop advances to rice growers, forcing more than 80% of producers to seek resources outside the financial system at more expensive interest rates, which affected them. its production costs. This was the case with the other agro-industrial sectors of the country’s agricultural production. The Comptroller’s Office and the Attorney General’s Office should open an ex officio investigation of fiscal and disciplinary responsibility to these officials for the possible economic damages caused to the farmers of the field and to the agro-industry of the country.

The second crazy idea of ​​these bureaucrats was to approve new categories of types of rural producers, proposed by the Duque government bureaucrats, supposedly to motivate private banks to lend to low-income producers. Six months later, 95% of credit operations for small producers had to be carried out by Banco Agrario, assuming the entire risk of the portfolio. If you want to bank the rural sector, start by lowering bank provisions, extend Finagro’s rediscount to Stock Brokerage Firms and Private Investment Funds supervised by the Superfinanciera, reduce Finagro’s rediscount rates, subsidize interest rates for loans to producers integrated into the industry or trade and categorize producers only by their income levels.

The same fate befell the interest rate subsidy programs for the various rural communities.

* Consultant in agricultural development credit.