Agricultural Policy in the Post-Conflict in Colombia

This research evaluates the effects of targeting current agricultural policy instruments to zones highly affected by the armed conflict in Colombia, as a way to appraise their power to aid in enhancing agricultural activity and income generation capability in these zones. A static computable general equilibrium model is used for this purpose, running on an agricultural specialized 2014 SAM. The main results indicate that the size of current agricultural subsidies lead to negligible macro effects on the economy, and that even at the sectoral level their impact, when evenly distributed among the main policy instruments and agricultural zones, is quite limited. However, when subsidies are targeted to the zones most affected by the armed conflict, significant increases are obtained in terms of value added for the targeted zones while negative outcomes arise for the rest of zones, as they lose “competitiveness”. This targeting leads to relatively minor changes in the zone-composition of agricultural output and is neutral with respect to the commodity composition of agricultural output. Furthermore, the composition of sectoral factor income changes slightly, favoring capital rents against land rents and wages for skilled and unskilled labor.