Announcement of Colombia to Diversify Agricultural Production on June 29, 1984

FOR IMMEDIATE RELEASE * World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. BANK NEWS RELEASE NO. 84/106 Contact: Ciro Gamarra June 29, 1984 (202) 477-5320 COLOMBIA TO DIVERSIFY AGRICULTURAL PRODUCTION Colombia is moving away from its heavy dependence on coffee exports. Farmers, entrepreneurs, and organizations involved in coffee production will invest some $254 million in an effort to diversify agricultural production. The World Bank will finance part of the project by lending $50 million. As a result of the project, the share of crops other than coffee in the use of land is expected to double from 10 percent to 20 percent. Agricultural production is forecast to go up by 3 percent, and farmers' incomes by about 50 percent. The project will benefit some 13,600 farmers, 40 private enterprises, and some 170 marketing entitites. Coffee production is important for Colombia's economy. It employs about 600,000 workers, or about 30 percent of agricultural employment and 8 percent of the country's laborforce. During the second half of the 1970s, coffee accounted for some 7.5 percent of government revenues. However, the government is diversifying agricultural production because Colombia's export quota under the International Coffee Agreement is not expected to rise significantly. At the same time, the price of coffee in the world market is projected to drop in the near to medium term. Project funds will be used by the Federacion Nacional de Cafeteros de Colombia (FEDERACAFE) to finance investments in diversified crops and livestock. Borrowers will use the loans to prepare and develop land, purchase seeds, machinery, and implements, and to start new crops. FEDERACAFE, an organization of private producers, is the implementing organization for the project. Loans will also be provided to cooperatives and private entities for the construction of marketing facilities. Other loans, to agroindustrial entrepreneurs, will help expand or build industrial and agricultural processing facilities. Technical courses in crop and livestock production, farm management, and extension will be given for staff of the Coffee Zones Development and Diversification Program, a department of FEDERACAFE. The department's information system and staff will be expanded. The project beneficiaries will invest close to $54 million, and FEDERACAFE, the Industrial Financing Fund, and the Agricultural Financing Fund will contribute about $150 million. The World Bank loan is for 17 years including four years' grace, with a variable interest rate, currently 10.08 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on undisbursed balances and a front-end fee of 0.25 percent on the amount of the loan. NOTE: Money figures are expressed in U.S. dollar equivalents.