Colombia's Cocaine Production Threatens to Overtake Oil as Top Export
Colombia, historically known for its oil exports, is facing a surprising shift in its economic landscape. Cocaine production is on the rise, and it is poised to overtake oil as the country’s primary export. This shift is driven by a 30% decline in oil exports in the first half of the year, according to estimates by Bloomberg Economics.
In 2022, Colombia’s cocaine export revenues surged to a staggering $18.2 billion, coming dangerously close to the $19.1 billion earned from oil exports the previous year. Cocaine production reached an all-time high of 1,738 tons, with the cultivation of coca leaves, the raw material for cocaine, expanding by 13% to cover a record 230,000 hectares (570,000 acres).
This concerning trend is occurring as President Gustavo Petro, Colombia’s first leftist leader, adopts a more lenient approach toward drug trafficking. His focus has shifted towards targeting drug lords who profit from overseas sales rather than cracking down on coca leaf producers, who are considered the weakest link in the production chain.
While this approach may pave the way for potential peace talks with major drug-trafficking groups to end decades of civil conflict, it has also inadvertently facilitated illegal groups in ramping up cocaine production.
The increase in cocaine production has had short-term effects on Colombia’s economy, affecting domestic demand and external accounts, although it doesn’t seem to have a direct correlation with the performance of the Colombian peso.
It’s important to note that the estimates provided by Bloomberg Economics for cocaine exports are based on the difference between production and seizures, which may not account for domestic consumption and seizures in transit and destination countries. The export price is also calculated using various factors.
In sum, Colombia’s evolving economic landscape, with cocaine potentially surpassing oil as its main export, highlights the complex challenges the country faces in addressing drug production and trade while attempting to navigate a path towards lasting peace.
