Colombian Cocaine Nears Oil Revenue: War On Drugs Failure And Rural Inequality Amplify The Equation

Colombia's leading export is transitioning from oil to cocaine. With oil exports falling 30% in H1 2023, a recent report by Bloomberg Economics, predicts that cocaine revenues will surpass oil this year.

As the world's top cocaine producer, Colombia reached its highest production level since 1991, producing 1,738 tons worth $193 billion in 2022.

In 2022, the cocaine industry generated $18.2 billion in exports, closing in on the $19.1 billion oil exports.

Growers have become more efficient, with better yields and investments in irrigation and fertilizers, boosting coca crop yields to 230,028 hectares in 2022.

The average crop yield increased from 4.3 to 7.0 tons of coca leaves per hectare from 2013 to 2020.

Colombia's illicit cocaine sector accounted for 5.3% of GDP in the past year, according to economist Felpi Hernandez's estimates.

Cocaine's Resilience: Colombia's Ongoing Battle Amidst the Failed War on Drugs

Despite four decades of U.S.-led efforts to reign in drugs in Colombia, the country still holds the dubious title of being the world's largest coca cultivator and cocaine producer.

Throughout this period, Colombia has primarily focused on disrupting the drug supply chain, often criminalizing farmers at the bottom of this chain.

Even the ambitious $10 billion U.S.-backed Plan Colombia, which sought to combat drug trafficking and organized crime from 2000 to 2015, ultimately fell short of eradicating the drug industry. Colombia's coca and cocaine production continues to surge, reaching unprecedented levels.

The White Lifeline: How Coca Fuels Rural Communities

Coca-cultivation sites can stretch for miles, providing a vital source of income for rural communities under 100 families. The illegal coca economy sustains nearly everyone's livelihood, from farming and harvesting to selling the crop, despite the risks of arrest and imprisonment.

Local infrastructure, including roads, sports facilities and homes, often owes its existence to the proceeds from coca cultivation, underscoring its central role in the community's economic survival.

Colombia's first leftist president, Gustavo Petro, is embarking on a novel strategy to address the country's drug issue. Petro, who has openly criticized the "categorical failure" of the war on drugs and its toll on Latin America, is advocating for a shift in drug policies.

Recognizing the need for change, his administration aims to invest in rural communities.

Unemployment And Land Inequality In Colombia's Economy

In 2020, Colombia experienced its highest recorded level of unemployment in history due to the coronavirus pandemic and the subsequent economic contraction. Nationally, including rural areas, unemployment stood at 15.9%, up from 10.5% the previous year.

In 2020, Colombia, with 50 million people, had 19.8 million employed or 3.76 million unemployed and 16.25 million inactive. The country lost 2.44 million jobs, and its economy shrank by about 6.8% due to COVID-19 lockdowns and closures.

Furthermore, the Organization for Economic Co-operation and Development (OECD)'s February 2022 report on Colombia noted that 60% of workers are in informal employment, which excludes them from social security access.

Rural inequality in Colombia, marked by 1% of the population owning 81% of the land, has far-reaching economic consequences.

Fragmentation, Drug Trade And Livestock Dominance

This skewed land distribution has pushed peasants to ecologically unsuitable areas, fostering land fragmentation and limiting agricultural productivity.

Furthermore, the emergence of the drug trade provided profitability to colonized areas, leading to the erosion of state control and perpetuating land inequality.

This concentration of land ownership has resulted in extensive livestock farming rather than productive agriculture, hindering economic development.

According to the Geographic Institute of Colombia, land ownership inequality in rural areas, measured by the Gini coefficient (where 0 signifies total equality and 100 represents complete inequality), averages 89.7 percent. This reaffirms that Colombia has a significant amount of rural land concentrated in a few hands.

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Photo by Gabriel Porras on Unsplash.