Cocaine is set to become Colombia’s main export, overtaking oil, as production of the narcotic continues to expand as the government take a more lenient policy regarding drugs, according to estimates by Bloomberg Economics.

Oil exports posted a drop of 30% in the first half and the trend of cocaine trade has consistently risen, meaning the latter could be Colombia’s No. 1 export as soon as this year, according to Bloomberg economist Felipe Hernandez. 

“We estimate cocaine export revenues jumped to $18.2 billion in 2022 — not far behind oil exports of $19.1 billion last year,” Hernandez said in a note. “The government is destroying laboratories where coca leaves are manufactured into cocaine, but that hasn’t prevented production from expanding.”

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Colombia’s cocaine output surged to a record 1,738 tons last year, while the amount of land planted with coca, the raw material for making the drug, rose 13% to a record 230,000 hectares (570,000 acres) in 2022 from the previous year, according to a UN Office on Drugs and Crime report published this week.  

Hernandez said the increase in cocaine production has had a short-term effect on activity, domestic demand and external accounts while not seeming to correlate with the performance of the Colombian peso.

President Gustavo Petro, the first Colombian leftist leader, has changed the nation’s approach toward drug trafficking, seeking to hit drug lords who benefit more from the sale of narcotics overseas rather than targeting coca leaf producers, who are the weakest link in the production chain. Petro is seeking talks with the nation’s main drug-trafficking groups, in the hope of ending six decades of civil conflict though peace accords.

The new policy approach toward drugs is facilitating illegal groups to increase cocaine production, Hernandez said.

Bloomberg Economics calculates the export volume as the difference between production and seizures, meaning the figure could be lower as the calculation doesn’t account for domestic consumption and seizures in transit and destination countries, while it estimates the export price adjusting the methodology of average wholesale prices in 2015-2018 and the cost, insurance and freight export price calculated by Andres Arias (2019).

Bloomberg Economics is a branch of Bloomberg LP that offers macroeconomic research service for Bloomberg Terminal subscribers and is separate from the newsroom.