Thursday, September 28, 2023

5 theses on food inflation in Colombia

When President Petro returned from his trip to Portugal, he announced, among other possible measures, that the Ara supermarket chain (which will open 230 new stores in the country in 2023) will be able to buy products directly from Colombian farmers, cutting out the middlemen between the supermarket and the Supermarket bypasses manufacturers.

For the economist Duván Ramírez, this is a proposal that recalls the creation of the Agricultural Marketing Institute (Idema) during the administration of Carlos Lleras Restrepo, which was in charge of regulating the marketing of agricultural products. By and large, Idema purchased from the manufacturer at profitable prices and then sold, stored, and exported those products.

“There were once Idema supermarkets in the country that purchased agricultural products from farmers at prices that guaranteed they would cover production costs. You could go to the state supermarkets, where you could even get imported food that the state bought directly,” says Duván Ramírez.

But for the economist, Idema leaves some lessons about the limits of a proposal like the one the president made to Ara supermarkets.

“The liquidation of Idema in 1994 was due to the fact that the company had been causing losses to the State since 1973, due to the costs it had assumed for the storage of crops and the differences between prices at which it sold food compared to the prices at which it sold food what it bought to them,” says the economist.

For Duván Ramírez, this shows that middlemen cannot be easily removed from the food marketing chain.

“I think the president wants to go back to that a little bit, but in doing so he ignores the fundamental role that intermediaries play. It is true that today the chain of intermediation has become much longer and this is reflected in the phenomenon that when the farmers go to the market, “their cargo is baptized” and they set a price at which they can buy the banana or Selling the papaya example,” he says.

For the scientist, however, it should not be ignored that the brokerage represents added value for the cargo, as it fulfills important functions, such as making food such as potatoes or blackberries available in stores or at collection points.

“Localizing the product in a supply chain has a cost and cannot be ignored. For example, if you go to Meta, farmers in the Lejanías sector take the product to collection points precisely because it is very difficult for them to transport their load to a large marketplace.

Therefore, the collection points are a necessary intermediate step: they bring the product to Corabastos and sometimes take on the work of maturing the product at their own expense,” says Ramírez.

Nation World News Desk
Nation World News Desk
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