Cocaine Outpaces Oil As Colombia’s Most Valuable Export

Authored by Matthew Smith via Oilprice.com,

• Colombia’s cocaine production reached a record high in 2023, despite government efforts to combat the illicit industry.

• The booming cocaine trade is driving insecurity, corruption, and violence, damaging key economic sectors like the oil industry.

• The cultivation of coca and production of cocaine has been fueled by a complex interplay of factors, including demand, profitability, and the involvement of illegal armed groups.

In a shocking development, Colombia’s cocaine production, for the 10th year straight, soared to a new record high. The UN Office on Drugs and Crime (UNODC) estimates that the year’s annual output grew 52% year over year to a startling 2,664 metric tons, the largest amount ever produced. Despite the government in the capital Bogota, with U.S. backing, committing substantial resources to disrupt what is now an economically crucial illicit industry in rural Colombia coca cultivation and cocaine manufacturing keeps spiraling higher. The booming cocaine trade drives heightened insecurity and corruption which are damaging key economic sectors, notably the fiscally vital petroleum industry with oil Colombia’s most valuable export.

Since the 1990s, except for a brief period from 2011 to 2012, Colombia has consistently been the world’s leading cultivator of the coca plant. The bushy shrub’s alkaloid-rich leaves, long chewed by Indigenous South Americans to boost energy and ward off altitude sickness, are the vital precursor needed to manufacture the popular recreational narcotic cocaine hydrochloride which is widely consumed in developed nations around the world. The volume of cocaine produced is spiraling ever higher despite Colombia, since the 1980s, waging a multi-billion-dollar U.S.-backed war on drugs, 

This conflict not only failed to stem the flow of cocaine but prolonged Colombia’s civil war and cost hundreds of thousands of Colombians (Spanish), mostly civilians, their lives. There are multiple reasons for this, but the key is the weakness of the Colombian state which is exacerbated by Bogota being caught in a protracted country-wide multiparty asymmetric conflict rooted in inequality, Cold War politics and foreign interference. Colombia’s widespread poverty and lawlessness create favorable conditions for the growth of illicit economies, such as smuggling, thereby allowing the cocaine trade to take root.

While the cocaine business has existed since the early 1970s in Colombia, it was the formation of the Medellin and Cali Cartels toward the end of that decade that put the Andean country firmly on the global map as a leading cocaine exporter. The vast profits cocaine generates caught the attention of a multitude of illegal armed groups across Latin America including those waging a vicious decades-long civil war in Colombia. This led to a significant escalation in the conflict among cartels, leftist guerrillas, and right-wing paramilitaries, all vying for control of the lucrative billion-dollar illicit industry. These events sparked a vicious cycle of escalating violence, which fueled further lawlessness thereby perpetuating the conditions that allowed the cocaine trade to thrive.

Surprisingly, large-scale cultivation of the coca plant did not occur in Colombia when the Medellin Cartel was at the peak of its power during the 1980s. Estimates put the amount of coca being cultivated during the mid-1980s at a mere 32,000 acres or 13,000 hectares, roughly a twentieth of what it is today. Both the Medellin and Cali Cartels, at the time the world’s largest suppliers of the drug, relied upon coca paste imported from Bolivia and Peru to manufacture the cocaine they were shipping to the U.S. and Europe. This changed as other illegal armed groups, particularly rightwing paramilitary death squads and the leftist Revolutionary Armed Forces of Colombia (FARC – Spanish initials) entered the fray. 

Undeniably, the April 1997 arrival of the United Self-Defense Forces of Colombia (AUC – Spanish initials) was a pivotal moment. The paramilitary umbrella group was financed by the cocaine trade from the get-go receiving payments from various trafficking groups, notably the Norte de Valle Cartel. The AUC’s formation heralded the introduction of large-scale coca cultivation to Colombia. The paramilitary leadership, who were major narcotic traffickers, moved rapidly to secure the supply of coca leaves, the essential precursor needed to manufacture cocaine. The ultraviolent group, responsible for most civilian deaths during Colombia’s armed conflict, came to dominate key parts of the economy having cultivated ties to politicians, security forces and domestic as well as international corporations. 

By 1998, a year after the AUC was formed and years after the fall of the Medellin and Cali cartels, there were an estimated 200,000 acres (80,000 hectares) of coca being grown in Colombia. To put that in perspective it is over six times the land utilized a decade earlier to grow the bushy alkaloid-rich plant. Since then, the amount of coca grown in Colombia continually soared to annual record highs. The cultivation of the coca plant and the highly profitable transformation of the bush’s alkaloid-rich leaves into cocaine hydrochloride became a leading driver of Colombia’s civil war and prolonged the conflict. 

UNODC data shows the volume of land (Spanish) under coca cultivation in 2023 grew 10% year over year to a record 625,176 acres or 253,000 hectares. This occurred despite the significant measures undertaken by Bogota to stem coca cultivation and cocaine manufacturing. The volume of coca cultivation, as the chart shows, soared after President Juan Manuel Santos halted aerial spraying of coca with glyphosate in 2015 due to serious health impacts becoming known. 

Source: UNODC Colombia Coca Cultivation Surveys 2013 to 2023.

In fact, by the end of 2015, the amount of coca planted in Colombia (Spanish) shot up by a startling 39% when compared to 2014 to 237,221 acres (96,000 hectares). The rising volume of coca grown in Colombia accelerated even faster after aerial spraying ceased with the acreage cultivated in 2016 soaring by an eye-popping 52% year over year to 360,773 acres (146,000 hectares). 

A potent cocktail is driving cocaine production higher despite Bogota’s efforts to manually eradicate coca, destroy laboratories and interdict shipments. A key driver is growing demand for the drug in developed countries, the sale of which generates immense profits for traffickers, incentivizing their illegal activities. While cocaine consumption is falling in the U.S., the world’s largest consumer, it is rising in Western Europe and Oceania with recreational consumption enjoying a renaissance in the UK, Belgium, Netherlands, France, New Zealand and Australia. 

The tremendous profits generated by cocaine trafficking form a massive incentive for all participants in the illegal industry to expand supply. This is the case for Colombia’s illegal armed groups, notably the Gulf Clan, FARC dissidents and National Liberation Army (ELN – Spanish initials) who after losing Cold War funding came to rely heavily on cocaine revenue. Undeniably, Bogota’s minimal presence in remote regions creates a fertile environment for illicit economies which combined with the tremendous profits generated by cocaine trafficking stimulates production. 

These factors coupled with transnational cocaine traffickers pressuring Colombia’s illegal armed groups to maintain supply incentivize those organizations to bolster efficiency, hence profitability, by improving coca cultivation and cocaine manufacturing techniques. This becomes apparent when considering that despite Bogota’s mounting efforts to eradicate coca crops, destroy illegal laboratories and interdict shipments cocaine supply continues expanding. As the chart shows, 2023 seizures of cocaine reached an all-time high, which incidentally did nothing to curb the flow of the narcotic.

Source: UNODC Colombia Coca Cultivation Surveys 2013 to 2023.

These developments, especially with coca cultivation and cocaine production hitting annual highs every year over the last decade, sparked considerable controversy over whether the drug is Colombia’s most valuable commodity. Over a year ago, Bloomberg claimed cocaine was on track to overtake oil and become Colombia’s top export. Unsurprisingly, since that article cocaine production has soared by over 50% while coca cultivation expanded by 10%, with those numbers underscoring just how efficient the manufacture of the narcotic is becoming.

It is difficult to see cocaine shipments from Colombia exceeding the value of petroleum exports any time soon. For 2023, National Statistical Agency data shows oil exports earned Colombia nearly $16 billion (Spanish), whereas various estimates put the value of cocaine shipments at around $7 billion. Of grave concern is that soaring coca cultivation and cocaine output pose a genuine threat to the economy and socioeconomic stability, especially in rural Colombia. The substantial profits generated by cocaine strengthen illegal armed groups, enhancing their efforts to challenge the state by undermining the rule of law and government institutions through corruption and violence. This will impact Colombia’s floundering economy, particularly the oil industry, while derailing urgently needed socioeconomic development and destroying communities.