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What is the Andean Price Band System (SAFP)?

  • By Siacomex
  • 8 July, 2024

The Andean Price Band System (SAFP) is a mechanism implemented by Colombia through the Andean Community of Nations (CAN) since 1995. Its primary objective is to stabilize the import cost of certain agricultural products that exhibit significant instability in their international prices.

Products Included in the SAFP

The SAFP covers a variety of agricultural products, including:

  • Pork
  • Chicken pieces
  • Whole milk
  • Wheat
  • Barley
  • Yellow corn
  • White corn
  • White rice
  • Soybeans
  • Crude soybean and palm oil
  • Raw and white sugar

Characteristics of the International Agricultural Market

The international market for agricultural products is characterized by price instability and distortions caused by the agricultural policies of the major importing and exporting countries. These fluctuations can negatively impact both producers and consumers in the CAN member countries.

Operation of the SAFP

To mitigate the effects of price volatility, the SAFP establishes the application of variable duties in addition to the Common External Tariff (AEC) of the Andean Community for imports of the specified products from third countries when international reference prices are below certain minimum levels (floor levels). Similarly, when international reference prices exceed certain maximum levels (ceiling levels), member countries will apply reductions to the AEC to lower the import cost.

This system allows CAN countries to dynamically adjust import tariffs in response to international price fluctuations, thereby protecting their domestic markets and agricultural producers.

Benefits of the SAFP

The Andean Price Band System (SAFP) offers several benefits for the importation of these agricultural products and the local market, including:

  1. Price Stability: Helps stabilize domestic prices of essential agricultural products, avoiding severe impacts due to international market fluctuations.
  2. Protection of Local Producers: Shields local producers from unfair competition by significantly low-priced imported products.
  3. Food Security: Contributes to food security by ensuring that agricultural products are available at reasonable and stable prices.
  4. Adaptability: Allows flexible and dynamic adaptation to changing global market conditions.

The Andean Price Band System (SAFP) is a crucial tool for economic stability and the protection of agricultural markets in the member countries of the Andean Community. Through the implementation of variable duties and adjustments to the Common External Tariff, the SAFP mitigates the effects of international price fluctuations, promoting fair and balanced trade.

For the importation of agricultural products subject to the SAFP, it is necessary to review the circular that applies the tariff for each fortnight, as well as whether the product is subject to any tariff reduction resulting from a trade agreement for the correct calculation of the tariff.

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