Agricultural production amidst conflict : the effects of shocks, uncertainty and governance of non-state armed actors

This paper examines the effect of conflict on agricultural production of small-farmers. We use a unique household survey applied to 4.800 households in four micro-regions of Colombia. The survey collects detailed information on households’ economic conditions, incidence of violent shocks, and presence of non-state armed actors. We separate the effects of conflict on direct impacts, measured through conflict-induced shocks, and indirect impacts, measured through years of presence of nonstate armed actors. The results show the association between lower agricultural production and conflict transmits through different channels. In regions with an intense conflict, yearly agricultural revenues per hectare and investments are lower, and households concentrate production on seasonal crops and pasture. Presence of non-state armed actors is associated with an immediate increase in production costs, lower access to formal financial institutions, and lower investments. The results suggest that households are affected by indirect and direct impacts that may induce sub-optimal agricultural decisions. Although traditional reconstruction efforts are crucial, post-conflict policies should also aim to reduce uncertainty and improve the rule of law to foster increases in production.