Colombia is one of the world’s most biodiverse countries, with vast expanses of forests and natural ecosystems. But a long history of conflict, deforestation, mining, and coca cultivation have caused significant damage to the ecosystems and the communities around them. For many of the country’s farmers, illicit activities continue to be the only profitable option, leaving little choice but to take part.

The solution isn’t simple and according to Palladium’s Katie Paguaga, requires a market systems approach. “If we really expect a farmer to change the way they work and choose not to participate in illicit activities, they must have a licit pathway out of poverty, and that’s only possible if they can increase crop productivity, get higher prices and professionalise their farms, all in a way that’s climate-resilient.”

Creating business models and market systems that ensure that small farmers have a sustainable alternative to illegal activities is at the heart of USAID’s Sustainable Agriculture Activity, which Palladium was recently awarded. The US$51.58 million, five-year project will expand legal, profitable, and climate-smart agribusiness models for Colombia’s rural producers and value chain actors in conflict-affected regions with high prevalence of illicit crops. The work will focus on improved irrigation, cultivation, and fertilizer use, combined with access to finance and connection to local buyers will be transformative for farmers, including remote farmers getting support for the first time.

“We’re focused on market systems linked with environmental sustainability, because we believe that they must be linked for producers to make sustainable choices,” Paguaga explains. “The reality is that selling carbon credits or ecosystem services is not enough for a livelihood, it must also be combined with improvements in efficiency, productivity and quality, leading to a profitable and sustainable business.” Only then, she says, will famers have a viable economic alternative that isn’t limited to the length of this USAID-funded project.

But supporting farmers is only one part of the equation. In addition, the project will facilitate private sector partnerships and investment to bring in more competition and a diversity of buyers, build out supply chains, and overcome any infrastructure barriers so that farmers and farmer alliances can reach beyond the current buyers that may be taking advantage of the situation and potentially supressing prices.

Critically, the project will focus on sustainable-production, non-polluting processes that conserve energy and resources, and aspects of production that accelerate carbon storage and reduce greenhouse gas emissions from land within the coffee, cacao, rubber, dairy, fruits, and vegetables value chains.

“We’ve seen how areas affected by conflict have been transformed elsewhere and to be able to replicate that with these methodologies and see a transformation in some of these zones where producers haven’t had a lot of options is really exciting,” notes Paguaga. The project will be focused in the conflict-affected areas of Catatumbo, Bajo Cauca, Cordoba, Southern Bolivar, and Caquetá and will be strategically positioned to support the Government of Colombia’s rural economic development efforts.

For Palladium's Managing Partner for Inclusive Growth, Eduardo Tugendhat, integrating marginalised rural populations into a more prosperous and licit Colombian economy requires very different models that provide an order of magnitude improvement in livelihoods and proper stewardship of natural resources.

“This program provides the platform for catalysing new relationships between communities, private companies, finance and natural capital and demonstrate to all stakeholders new commercially viable models for sustainable and inclusive growth.”

For more, read 'Helping Colombian Farmers Choose Acai over Illicit Activities' or contact info@thepalladiumgroup.com.