Without explicit sustainability mechanisms, public finance for agriculture overwhelmingly flows to conventional, environmentally harmful practices. When fiscal instruments are designed around competitiveness or crisis response alone, the path of least resistance leads to chemical fertilizers, agrochemicals, and other conventional inputs that producers, suppliers, and institutions are already familiar with. Sustainable alternatives, even when formally eligible, are crowded out by inertia, price signals, and the absence of dedicated targeting. Colombia’s Fund for Access to Agricultural Inputs (FAIA) offers a striking case study of this dynamic, and of what it takes to begin reversing it.
Colombia’s FAIA was built to absorb price shocks, not to drive sustainability. When agricultural input prices surged in the wake of Covid-19 and the Russia-Ukraine conflict, Colombia responded with the Fund for Access to Agricultural Inputs (FAIA) in 2022. With a budget of nearly 290 billion Colombian pesos reaching 30 departments, the FAIA rapidly became one of the country’s most significant fiscal instruments for supporting smallholder farmers. Yet, the fund was designed as a competitiveness mechanism, not a sustainability one. Its legal framework is disconnected from Colombia’s upstream environmental commitments (the NDCs, the Long-Term Low Emission Development Strategy, the National Biodiversity Strategy) and none of its governance bodies carries an explicit sustainability mandate. Finally, the legal definition of “agricultural input” draws no distinction between conventional and sustainable products.
The result confirms that in the absence of sustainability mechanisms, finance flows almost entirely to conventional inputs. During the fund’s first phase (2023–2024), over 94% of resources went to conventional chemical inputs, despite sustainable alternatives being formally eligible. In the coffee sector, only 0.19% of funds reached bio-inputs. Eligibility, in other words, is not enough. Without dedicated budget allocations, differentiated incentives and targeting mechanisms, formal openness to sustainable alternatives hardly translates into concrete uptake.
The reverse also holds: when sustainability mechanisms are built in, finance follows. A substantial shift began with the FAIA’s second phase in 2025, when a dedicated National Policy of Bioinputs, Organic Fertilizers, and Soil Conditioners was introduced and differentiated co-financing rates began tilting support toward sustainable alternatives. Building on this trajectory, the recommendations of the UN Development Account (UNDA) project “Financing NbS for a Green and Inclusive Recovery in Latin America” have helped shape the design of the 2026 FAIA Integral National Programme, where sustainable input costs are now subsidized at up to 48%, with an additional 2% increment for women and youth to strengthen social inclusion. Beyond the 8.71 million USD committed for the current fiscal period, additional resources are expected in future programmes, given that the continued operation of the FAIA is mandated under Law 2183 of 2022. The FAIA is also being deployed as a central part of a USD 190 million recovery package channeling sustainable input subsidies to Córdoba, Sucre, and Antioquia in response to recent climate-related disasters. Finally, the project has prompted the national government to advance a proposed revision of the legal definition of agricultural input under Law 2183 of 2022 to incorporate sustainability criteria, providing central guidance for all FAIA programmes going forward.
Colombia’s experience carries a wider lesson for any country designing agricultural support. Fiscal instruments designed in response to short-term price crises risk entrenching unsustainable production patterns for years, unless environmental criteria are built into their legal and operational architecture from the outset. The FAIA’s trajectory from Phase One, when over 94% of resources defaulted to conventional inputs, to a 2026 programme that subsidizes nearly half of the cost of sustainable inputs shows that course correction is possible. But it also illustrates how much harder policy refinement becomes once institutional inertia and producer expectations have already been shaped by the initial design. The clearest path is to embed sustainability mechanisms from the start, so that finance follows the policy ambition rather than running against it.
About the authors
Thomas Loussouarn, Intern at the United Nations Environment Program, Economic and Fiscal Policy Unit
Minhyuk Hong, Associate Expert at the United Nations Environment Program, Economic and Fiscal Policy Unit
