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Colombian Investment III - The Cafetero
When one considers Latin American Investment and investing in Colombia in particular the famous words of Baron Rothschild come to mind. This 18th century investor and banker is credited with saying that “The time to buy [stocks] is when there is blood in the streets.” He was talking about 18th century wars and rebellions but his words are pertinent in the New World today. Specifically, Colombia is coming out of a half century long rebellion and many investors have not yet caught on. This is the third of a four part series about Investing in Colombia. We will deal briefly with the history of the Colombian Civil War and then look at investment opportunities in the coffee heartland of Colombia.
The Colombian Civil War
The current Colombian civil war has lasted from the mid 1960’s to the present. Rebels say they are fighting for the rights of the Colombian poor. The primary rebel group is FARC (Fuerzas Armadas Revolucionarias de Colombia). The rebels primarily have occupied remote areas of the jungle, especially in the Amazon Basin with occasional forrays into the cities. An increasingly aggressive campaign by the Colombian government has driven FARC from the cities and forced them to cross borders into Venezuela, Ecuador, and Panama in search of sanctuary. Despite the claim that FARC simply wants to improve the lot of poor Colombians they have been tied to drug trafficking. Many Colombian families can name a member of two who were assassinated by FARC for opposing extortion efforts by the rebels. On the other hand government allied paramilitary forces fighting FARC are also accused of drug trafficking and terrorism. The good news is that the conflict is settling down and Colombian Peace Talks have begun. The time has come for investing in Colombia.
The Best Coffee in the World
The Cafetero is the coffee growing region in Colombia. It lies to the West of the Andes and includes the cities of Pereira, Armenia, Manizales, and Medellín. The region comprises only a little over one percent of Colombia and just over two million people. Colombia is the third leading exporter of coffee in the world. It is the second leading exporter of Arabica coffee, generally considered to the best coffee. Most coffee lovers also consider that Colombian coffee, sip per sip, is better than Arabica coffee from Brazil, the world’s leading exporter by bulk. Because of coffee production this region has reasonable economic strength but it is certainly not an industrial region. On the other hand cities like Pereira at 3000 feet are in the Latin American “land of eternal spring.” That is to say, the temperature never drops below about 60 degrees Fahrenheit at night and rarely above 85 degrees during the day.