Colombia is the second largest non-centrifugal sugar, locally known as panela, producer in the world after India according to the United Nations Food and Agriculture Organization (FAO). There are an estimated 70 thousand panela farmers with 80 percent of production occurring on farms of less than 5 hectares. The panela sector employs approximately 120 thousand subsistence farmers throughout Colombia. Panela production is dispersed with thousands of low technology crushing facilities throughout Colombia. In 2012, Colombian non-centrifugal sugar production was 1.2 MMT, a five percent increase from the previous year due to less rain.
In 2005, distilleries began producing ethanol, impacting sugar production and distribution to local and external markets. Domestic ethanol demand has offset sugar exports significantly, about 40 percent annually since 2006. In 2012, ethanol production reached 370 million liters and plant capacity remains at approximately 1.3 million liters per day.
The main features of the Colombian sugar sector are that sugar cane is harvested year-round, supporting a continuous process of harvesting, milling and distilling. Sugarcane production and processing are heavily concentrated in the Cauca river valley. The growing climate and the density of mills and distilleries support economies of scale for sugar cane production in Cauca over other regions of Colombia. In the Cauca river valley alone there are 13 mills and five ethanol distilleries with more distilleries coming online in the near future.