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Agriculture and real estate in Cali, Colombia

HalloCasa invited Stefan Burkart who gave some interesting insights about agriculture and real estate in Cali, Colombia.

Cali Colombia Stefan Burkart International Real Estate Investment ColombiaHalloCasa: “Good morning Mr. Burkart. Thank you very much for taking the time and to talk with us about your experience in Colombia. To initiate, why don´t you introduce yourself quickly?”

Stefan Burkart: “Good morning. Thank you very much for the invitation. Originally, I am from Germany where I completed my bachelor and my master’s degree in “Agricultural Economy” at the University of Stuttgart.  

The International Center for Tropical Agriculture (CIAT) in Cali

The connection to Cali arose a few years ago. That was between 2009 and 2012 when I wrote my dissertation in the field of development of agricultural value chains and business models. I had drawn this up in cooperation with the International Center for Tropical Agriculture (CIAT) in Cali, Colombia, and in Managua, Nicaragua. After that I really wanted to work directly with the CIAT, but I got an offer of the University of Hohenheim in Stuttgart. So, I took that opportunity and was working there for about 2 years in the field of social sciences, until it pulled me back to the CIAT in August 2014. Now I’m working on the Tropical Forages Program (Program for forage crops) and lead the field of socio-economic research.

In addition, I work as a Program Officer: this position involves the coordination of research, the monitoring and evaluation, management of budgets and the creation of project reports. This also involves global meetings for research planning and coordination.”

HalloCasa: “That sounds like an interesting journey! What is the exact task of the International Center for Tropical Agriculture and what does it deal with?”

Stefan Burkart: “In summary, the mission of the CIAT is to fight hunger and poverty and to improve human nutrition.

In detail, this is achieved by research in agriculture and food. Another, newer goal of the CIAT is to increase the eco-efficiency of agriculture. For this, we are researching new technologies to make agricultural production more environmentally friendly. Thereby, we want to help to reduce climate change and to create sustainability.

CIAT is working in the tropics and subtropics with headquarters in Cali, Colombia, and additional offices in Africa, Asia and Central America. The very focus is on the following agricultural products: tropical forage crops, rice, cassava and beans. Additionally, research is conducted in the following areas: climate change (relationship agriculture and climate change), interaction of soil and agriculture, market development and market development for agricultural products, development of business models.”

Cali, Valle de Cauca

HalloCasa: “Ok, that sounds like a wide range of tasks and responsibilities. You are living in Cali. Addressing people who don´t know Cali, how would you describe it?”

Stefan Burkart: “Cali is a great city. Maybe not as much as a tourist because, apart from the many salsa clubs, it only has a few sights and the old town is just going to be modernized again.

However, it´s simply great to live here. The climate is perfect, sometimes maybe even a little too hot, but due to the altitude of Cali (1,000m / 3280.84 feet above sea level) it´s not nearly as humid as on the Colombian coasts.

In the afternoons there is always a nice breeze from the Andes blowing. Regarding leisure activities, there are many things you can do here. There is a huge amount of possibilities within the city, such as the many discotheques and bars, restaurants, or the large number of sports facilities.

In case you want to leave the city for recreational purposes, the Pacific coast is nearby and the Zona Cafetera or Popayán, a very beautiful colonial city, are within good reach. Furthermore, the Farrallones, mountains near Cali, which also include a National Park, offer numerous opportunities to enjoy the nature.

For example, you can go rafting on one of the many rivers or hiking on various trails. With respect to the society in Cali, the “Calieños”, you just have to say that they are great, very nice and helpful. Clearly you have to know the city a bit so that you don´t find yourself in the wrong neighborhood, but you learn that relatively quickly.”

Agriculture in Colombia

HalloCasa: “Interesting, let´s now dive a little bit into your expertise and therefore into the agriculture sector in Colombia: what are the specific attributes and what are certain differences compared to the US. or Europe?”

Stefan Burkart: “That’s a very good question. In general, in comparison to Europe or the US. Colombian agriculture is organized around relatively small farmers. However, this is changing right now very strongly, since quality certificates are increasingly playing a much bigger role.

Furthermore, there is a strong attempt to push the Colombian export sector, for example, with tropical fruits and meat.

This is a sharp change which poses a huge challenge for Colombia since many of the small farmers will not be able to keep up with the harsh international competition and will therefore, most likely, be the victims of this change.

In this context, it is therefore very important that the Colombian government establishes adequate alternatives so that those small farmers will have new revenue streams. This, for example, is one issue which the CIAT addresses and works a lot on, helping small and medium-sized farmers to become more competitive so that they can survive in the market.

Apart from that regulatory alteration, we are always confronted with the issue of climate change in agriculture. Prolonged droughts influence the production and its producers obviously strongly, and it is now necessary to respond to it. Be it through new technologies, improved education and training or policy instruments and incentives.

Another issue that will affect the Colombian agriculture greatly will be the post-conflict period.

Because at the time the parties will lay down their weapons, new alternatives for the affected people will have to be created. This can be both inside and outside the agricultural sector, but the majority of affected people lives on the countryside.

That´s why adequate alternatives are being needed, especially in rural areas. Talking about agricultural products in Colombia: sugar cane, coffee, and tropical fruits are strongly represented. The meat sector is on the rise and the beef industry uses large parts of the available area of the country.

This actually relates to a different conflict. Colombian cattle producers often do not see added value in the investment in improved grasses which trigger productivity gains per square meter.

So, they prefer to lumber additional areas of forest to increase the amount of square meters for the cattle.

At CIAT, we are developing new technologies which help counteract this trend so that Colombia will soon be able to export beef and other meat products to international markets, such as Europe and the US. in a more environmentally-friendly way. However, this shift in mindset always takes time.”

HalloCasa: “Ok, these are always very interesting points and we see that it´s a huge topic about which we could talk for hours. Let us quickly turn to the free-trade agreements: which implications do they have for the agriculture sector in Colombia?”

Free-trade agreements with Colombia

Stefan Burkart: “Colombia has free trade agreements with many countries. I think there are more than ten currently. On the one hand, this is certainly positive because it opens international export markets for Colombian products such as tropical fruits or coffee. But on the other hand, of course, it also has a negative impact, especially in the areas where the Colombian economy is not really competitive. Unfortunately, we can see this problem in many areas of the agricultural sector, for example, in the meat production.”

HalloCasa: “How has the situation for farmers evolved over the past decades. Have farmers had the opportunity to rise socially and have they access to educational institutions such as colleges and universities?”

Stefan Burkart: “For small farmers, little has changed, to be frank. While some have partially enjoyed a good education, conditions for small farmers have not improved remarkably. Here, we can see a big gap towards midsize and especially large producers. The large producers often do not live on the countryside but prefer the cities or even destinations abroad with all its benefits.

While they are the landowners, they employ farm managers who take care of everything.

Due these striking differences between large producers and smallholders, small farmers realize that their potential return on investments is quite low and hence younger generations prefer not to follow in their parents´ footsteps.

Hence, the dedication towards other fields is being amplified so that the Colombian agriculture sector experiences a slowdown of younger smallholders.”

HalloCasa: “Ok, how could you tackle those challenges for small-scale farmers in a successful way?”

Agriculturual trends in Colombia

Stefan Burkart: “Well, in my view, research is obviously an essential part when it comes to improving the current situation. For example, by developing new, less expensive technologies tailored to small farmers, the situation could be improved tremendously.

Additionally, cooperation with various stakeholders should be enhanced in order to jointly carry out research and to find solutions to current problems. However, research alone cannot overcome all problems.

The Colombian government, for example, has to address the problem and needs to support new solutions, incentivize smallholders and proactively help so that new research findings are being put into practice. Obviously, corruption needs to be be combated. Those are fundamental elements which are necessary so that change can take place and this sector can prosper sustainably and within the long-term.”

HalloCasa: “Ok, great points. Among farmers and in politics, how do you see their awareness towards environmentally-friendly production and certifications like “FairTrade”?”

Stefan Burkart: “Actually, you can see that from the politics side there are various incentives for farmers to produce more sustainably.

Certain certificates have been used for many products already. However, there is a lot of change going to happen, especially in the coming years. Colombia wants to strengthen its position as an exporting nation remarkably and in order to do so those certificates are essential.

With respect to trade within Colombia, such certificates are important, but not to such a great extent. Large supermarket chains offer products that have been produced sustainably or organically, however, those chains are located mostly in better neighborhoods of large cities, where the purchasing power is higher.”

HalloCasa: “Ok, very interesting. Looking further towards the future: Which trends do you see in the agriculture sector in Colombia, in general?”

Stefan Burkart: “Sure, first of all, there is coffee which will always play a major part in Colombia´s food exports. Additionally, tropical fruits are playing an increasing role, greatly raising its share in exports. Beef´s share in exports will also augment steadily.

There are a lot of procedures and policies being worked on right now in order to make beef a competitive option in international markets – especially in the premium segment. Important to note here is that sustainable production will play a much greater role, which in fact refers to a production in accordance with economic, social, and environmental aspects.

In general, the issue of sustainability is becoming increasingly important in Colombia, and it can be observed that it is often times even the private sector, eg Supermarket chains and large corporations, which are pushing for sustainable forms of production, since most of them have their own corporate social responsibility policies.

Overall, I think, we can observe a good approach and positive trends for the future in Colombia.”

HalloCasa: “Ok, closing the topic of agriculture for now a little and turning to Colombian real estate. For foreigners who might be interested to purchase land in Colombia: why should they buy properties in and around Cali and what kinds of fruits and vegetables can be cultivated there?”

Real estate investment opportunities in Colombia

Stefan Burkart: “The region around Cali has excellent soils. Especially for sugarcane production is the soil one of the best ones worldwide. Yet in general, the climate is ideal for a lot of products. That´s why you can see that farmers cultivate a huge variety of fruits and vegetables in this region.

Unfortunately, however, the cultivation of sugarcane ousts heavily most other types of land use and triggers a sharp price increase of the land prices. Coffee unfortunately does not grow in the Cali region since the altitude is not high enough for the high-quality beans.”

HalloCasa: “How much does around one hectare of land outside Cali cost and how much is the price per square meter within Cali?”

Stefan Burkart: “The hectare prices vary greatly depending on the soil and the market demand. In general, however, prices in the Valle del Cauca, ie around Cali, are quite high, since the large sugar companies buy almost anything possible.

The price per square meter in Cali depends very much on where you want to stay. In safe areas, it is of course much more expensive than in dangerous neighborhoods. However, in general, prices have risen strongly during the last years.

The areas, which are best to live in, are the South and the West. The North of the city is also very beautiful. The East is generally very dangerous. In a good neighborhood prices per square meter can vary between 500 and 2,000 Euros, depending on the nature of the dwelling (for example. new vs. old, with pool vs. without pool, house vs. apartment).

According to my knowledge, Cali is the city in Colombia with the lowest price per square meter. With respect to new buildings, you have to take care because the building structure is often very, very bad. There are various properties which are built cheaply or which the construction companies have fudged.

Another point are the floor plans which are simply not being designed well. For example, you can get a small living room with three to four bedrooms on 80 square meters.

Therefore, in my opinion, the best solution is to buy an older home (10-20 years old), which are generally cheaper with good foundations and good layout. However, you then usually have to invest a bit in order to modernize it. Generally you obtain something much cheaper and have a great apartment afterwards.”

HalloCasa: “Great, those are insider tips we love to obtain! Now, turning to our closing section, where do you see Cali and Colombia in 10 years?”

Stefan Burkart: “If the current trend continues, then the real estate and land prices will continue to rise and Cali will then perhaps have prices comparable to Bogotá. The city is investing very heavily in modernization projects and in quality of life (eg, parks, leisure facilities). I think in 10 years Cali will be even much more livable than it already is. I think it would be a great idea to invest now in real estate.”

HalloCasa: “Ok, interesting! If you could change one thing in Colombia, what would it be?”

Stefan Burkart: “That’s a very good question. For me are three main problems in Colombia: corruption, security and basic education especially for low-income people.

These things need to be resolved as quickly and as seriously as possible, so that the country in the long term is internationally competitive. These are the three pillars for investment by international funds and firms, because lack of security and corruption diminish trust.

The lack of good education makes it harder for companies to employ an internationally competitive workforce in order to challenge incumbent companies.”

HalloCasa: “And if you could introduce one thing from Colombia to other countries, what would it be?”

Stefan Burkart: “Especially when I look at Germany from a Colombian perspective, that would be the Colombian relaxed approach to a lot of things. It is very pleasant to live in Colombia, because you don´t find the awkwardness of those grumpy people. Very pleasant!

HalloCasa: “Stefan, our time is up. Thank you so much for this insightful interview and for all your insider tips! In case readers want to contact you, would it be fine for you and how could they do it?”

Stefan Burkart: “Of course, I am happy to answer any kind of follow-up questions. Readers and investors can contact via e-mail me s.burkart@cgiar.org. Thanks a lot to you!”

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About HalloCasa:

HalloCasa, the marketplace for international real estate properties, is being founded by a German in Bogotá. HalloCasa´s mission is to build trust for vendors and investors with respect to cross-border real estate transactions.