Family Agriculture Units in Colombia – the rationale and objective

Publication September 2015


Summary

Agrarian reform is a key priority in Colombia given its history of unequal land distribution. The principal method by which reform is being implemented is through awarding state land to small-scale farmers and agricultural workers. In 1994, Law 160 was passed and among its key objectives was the intent to regulate this process, and in so doing take the necessary steps to redress the concentration of land ownership. Law 160 of 1994 was inspired by the constitution, which orders the state to provide access to land for the rural population who have little in the way of resources and by extension the concept of the Family Agriculture Unit was born.

What is the Family Agriculture Unit?

According to Law 160 of 1994, the Family Agriculture Unit is the amount/ area of farming land considered necessary for a family to generate a decent income. Family Agriculture Units are primarily regulated by Law 160 of 1994, which defines and establishes the limitations in relation to them. However, specific matters such as procedures, subsidies, appraisals, awarding of Family Agriculture Units and the criteria for eligibility of beneficiaries are spread across various decrees issued by the government of Colombia.

Family Agriculture Units were created to promote progressive access to land by small-scale farmers, increase their income and improve the quality of life of the rural population. Through creating these units, the government sought to rectify inequitable concentration of land in Colombia and enhance the overall volume of agricultural production in harmony with the development of other economic sectors. The function of the Family Agriculture Unit is to strengthen small-scale farming at an economic, productive and social level.

However, the size of a Family Agriculture Unit is not the same throughout the country, but varies according to municipalities, depending on production potential and other factors. The most important of these factors is that Colombia’s geographical diversity means that the quality of the soil in some regions is less fertile than others. This in turn means that some regions are only suitable for specific forms of agriculture, which may require more land in order to be feasible. The Colombian Rural Development Institute (INCODER) which replaced its predecessor, the Colombian Institute for Agrarian Reform (INCORA), is responsible for establishing the criteria which determines the size of a Family Agriculture Unit for each region in Colombia, taking into account all the characteristics and circumstances that might affect soil productivity. It should also be noted that the size of a Family Agriculture Unit can vary over time within the same region. Changing climatic, ecological and environmental factors require INCODER to annually analyse and update the methodology used in calculating the size of the Family Agriculture Unit throughout the different regions of Colombia.

When determining the amount of state subsidy to be provided to farmers, the particular difficulties and limitations encountered on their specific portion of land are taken into account. A farm located in a region where soil is much less fertile than in other parts of the country will require much more investment to be productive and subsidies will need to be higher in such cases.

It becomes clear from the above that the Family Agriculture Unit is more of a concept than a measurement. The criteria used to determine how much land is needed to enable rural families to earn a decent livelihood will not always be accurate, and are not applicable to all regions of the country homogeneously. Collectively this makes the fair implementation of Family Agriculture Units inherently challenging.

Restrictions on the use of the Family Agriculture Unit

Where a person has acquired a Family Agriculture Unit pursuant to being awarded an area of land that previously belonged to the state, they are prohibited from selling or leasing this land for a period of 15 years from its endowment, unless the land credit given by the government has been paid in full.

However, with the permission of INCODER, it is possible to trade, sell, lease or garnish the awarded land within the 15-year period, if the buyer is a low-income peasant or a smallscale farmer (the buyer will subrogate the obligations assumed by the seller in favor of INCODER). No transfer can occur if these conditions are not met and the real estate public registrar will abstain from registering the purchase contract.

If after the expiry of the 15-year period the owner wishes to sell the land, he must communicate this intention to INCODER, who then has three months from the date of that communication to reacquire the asset. Where no response is received after the three-month period or there is no interest in reacquiring the land, the owner is free to sell to any third party interested in buying. Once sold the seller cannot participate in the awarding of a new piece of land. This condition seeks to deter landowners from selling at will.

Colombian law prohibits anyone from being the owner, directly or through an intermediary, of more than one Family Agriculture Unit. Non-compliance with this provision gives INCODER the right to demand the immediate return of the land.

The above limitations are not applicable to land granted before Law 160 of 1994 came into effect, as the law has no retroactive power. These limitations will also not apply to rural land that has never been the property of the state. The purpose of the restrictions is to prevent local small-scale farmers from selling their land and effectively perpetuating high concentrations of land in the hands of a few wealthy individuals.

The Colombian government has attempted to eliminate/relax the restrictions on multiple Family Agriculture Unit ownership in order to facilitate agro-industrial projects in the country. Private investors in particular have found the restrictions limiting, and municipalities with the potential to profit from key projects remain untapped by large agro-industrial companies whose business could benefit the economy. However, the Constitutional Court of Colombia has declared the government’s attempts unconstitutional. The court ruled that the limitations imposed by Law 160 of 1994 serve as a tool to protect and promote the accessibility of the small-scale farmer to land. Therefore, its elimination would be regressive and opposed to the constitutional mandate to reduce the inequality gap that exists in the country.

Can agro-industrial projects be developed without breaching the restrictions imposed by Law 160 of 1994?

One of the biggest challenges with small-scale farming is that the farmers have no leverage with which to negotiate the prices of their products, as the weaker party. These smallscale farmers tend to negotiate with significant distribution companies that are in a stronger position to impose the conditions under which the deal will be conducted. Such conditions are often accepted by the small-scale farmer because he must sell his products as quickly as possible to address immediate financial needs.

Furthermore, when small-scale farmers do work independently they compete amongst themselves and effectively increase the number of suppliers within the market. When this happens, prices tend to fall significantly. Alternatively, what can also happen is that the smallscale farmers engage with intermediates because they are unable to communicate directly with consumers or distributors. These intermediates generally take a big share of the profits, which means the farmers receive very little earnings for their work.

But if the farmers worked together in an organised manner, they would be better able to negotiate prices with distributors (taking into account the effective reduction in the number of suppliers in the market). And once a large number of farmers become associated, their marketing capability increases and intermediates are no longer necessary. In line with this, Article 64 of the Colombian Constitution establishes that access to land can be promoted individually or in partnership, which means that the small-scale farmer has the right to work within an association.

The evolution from Family Agriculture Unit to Co-operative

In terms of Law 160 of 1994, individuals who have acquired land through the granting of areas previously owned by the state can integrate co-operatives. Under Colombian law co-operatives are organisations initially created by Law 454 of 1998, which consist of private law legal persons whose activities are for social interest and are non-profit. Under the 1998 law, a co-operative works as a voluntary association of workers who decide to make a financial contribution to the organisation by performing their respective economic activity, with the purpose of satisfying the common needs and goals of the association. In the case of agricultural co-operatives, the objective is to conclude supply contracts with companies dedicated to the distribution of agricultural products. However, co-operatives contemplated under Law 160 of 1994 must comply with the condition that members of the co-operative own equity in the distribution companies, by allocating at least 10 per cent of their annual income to the subscription of shares. This ensures that small-scale farmers do not exaggerate sale prices, and also decreases the likelihood of the farmers buying products at paltry prices, when they also act as owners of the distribution companies.

The number of co-operatives in Colombia is increasing fast. In fact, according to the Confederation of Co-operatives of Colombia almost 800 agricultural co-operatives are now functioning in the country, with more than 140 000 members1. In addition, approximately 10 000 jobs were created as a result of these co-operatives. However, most seem to be made up of milk and coffee producers (indicating that other products are not as popular) and as a result are concentrated in areas where the production of coffee and milk is prevalent. Most of the co-operatives would be classified as medium or small, with only a few large agricultural co-operatives in the country. But these growing figures indicate that collaborative work among small-scale farmers is gaining acceptance./p>

Small-scale farmers can also organise communitarian companies, in order to divide amongst themselves the gains or losses that result each year, in proportion to their contributions. A communitarian company works as an organisation where a number of people agree to contribute their labour, industry and services, to develop one or more rural properties for commercial gain. This includes the processing, commercialisation and marketing of agricultural products as well as the provision of services. Members of the organisation can also engage in other related activities if they are necessary to fulfill the purposes of the communitarian company.

The communitarian company has the objective of improving the standard of living of its members at an economic, cultural and social level and ensuring sustainable work and food security for each of its members. Members of the company are only liable up to the amount of their respective contributions, which means that their personal assets are protected from any breach or noncompliance of the communitarian company. This serves to protect the small-scale farmer, which helps strengthen their bargaining position.

Associations such as co-operatives and communitarian companies can also work together or even merge to grow and expand their influence. The possibility of this could create larger scale associative forms of working which tend to be more efficient. Both co-operatives and communitarian companies are specifically regulated by Law 454 of 1998, and are subject to the control exercised by a specific control entity.


Footnotes

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