Incentives for the investment in agricultural projects in Colombia

Incentives for the investment in agricultural projects in Colombia

In February 2017, the constitutional court declared the law 1776 of 2016 known as ZIDRES feasible, with the purpose that certain areas of rural interest would be exploited, specifically agricultural goods. These areas are isolated from the most significant urban centers and demand high costs of productive adaptation. They have low population density and high poverty rates because they lack the minimum infrastructure for transportation and marketing of the products. These areas have a high agricultural vocation, but for different reasons have not been able to be developed.

 

ZIDRES are legal systems created by the government with the initiative to associate models between peasants, medium producers and entrepreneurs to exploit lands that were not previously accessible. In other words, it is a law that combines work between entrepreneurs and peasants in a collaborative way in areas where the costs of production are high.  ZIDRES have not been implemented yet; however, the government is in the process of structuring the law so that investors will be able to propose associative projects with the peasants of rural areas.

According to the minister of agriculture: “the law seeks to promote the social inclusion of Colombian agrarian workers, increase sustainable land productivity, promote social and economic development of the area, improve soil agrological conditions, encourage environmental conservation, promote access and regularization of land ownership for agricultural workers, and promote rural employment and food security.”

 

The government has committed to grant special incentives to the companies that are planning investments in these rural areas, but they have not declared the specific type of incentives that would be given. There is yet no article written in the law about the incentives. Government authorities are deciding on possible incentives for investors included: such as public goods, roads, irrigation systems, research, access to credit, among others benefits.

Even though the government has not given economic benefits, there is a very attractive aspect for investors with this new law which is the access to “baldios”. these are brownfield sites without any property dominium that are in the power of the government.

 

The “baldios” are rich lands for production of agricultural goods which have not been harvested by humans because previously to ZIDRES, the government did not permit the access to these areas to any type of investor. Nevertheless, with law 1776 of 2016 the government commits to give full access to companies who are planning to exploit agricultural goods.

 

It is very important to specify that the companies interested would not become owners of the land declared as “baldios”, instead, it would be rented to them during the period of production. In other words, Colombian politicians have established that property will not be delivered to investors because this law is thought only in the means of productivity, not ownership.


Investors who are planning on occupying brownfield sites would be have an obligation to fulfill a payment to the rural development fund to provide the necessary infrastructure for the expansion of ZIDRES.

The only land that can be used with the benefits of ZIDRES are those whose origin is lawful and will be accessed through the modalities of leasing, purchase, contribution to society or concession. The areas that cannot be included in ZIDRES are: indigenous reserves or zones of ethnic communities, collective territories or in the process of titling, natural parks, moors, wetlands and territories that have been affected by measures taken by the government to protect against forced displacement.


The government goal with ZIDRES is to be able to exploit more than seven million hectares in the country, a size of land similar to Ireland. The hectares are distributed in the Altillanura, La Guajira, Uraba Chocoano and La Mojana.


To conclude, ZIDRES would be a safe legal system for investors because private capital associations can have presence in the area and form alliances to exploit with landless peasants who wish to settle in these areas. It is a perfect economical combination between the money from investors and the knowledge of land from the peasants. Also, it is a very granting law for investors because it has opened the access to “baldios” for them, which historically had been prohibited.

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