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This paper addresses Colombian agricultural modernization policies for the period of 1996–2008, in which an extreme change in the agronomic total factor productivity (TFP) growth trend occurred and Colombia suffered one of the most violent periods in its history. This paper takes into consideration the state-supported credit system that existed, which aimed to allow the agricultural sector to compete with external markets, seeking a balance between measures aimed at increasing the competitiveness of the agricultural sector and those directed at rural wellbeing. In this context, Colombia is working to increase the competitiveness of the agricultural sector; nevertheless, over 95% of resources are provided based on financial criteria and less than 5% are directed toward other necessities. Financing through credit explains one aspect of the evolution of Colombian agricultural production. It is because of this that smallholder farmers with a high level of social capital have to compete using the same rules as large-scale producers, exporters and emerging producers, all of whom are favored as politically strategic sectors in Free Trade Agreements (FTAs). This creates a complex agricultural landscape, as it aims to maintain large, medium and small producers while the volume of money granted is not proportional to the number of beneficiaries. This means that, in some cases, agricultural social policies are ineffective, perpetuating subsistence agriculture with low levels of technology and productivity. Some exceptions exist, however, such as in the case of coffee, banana, potato and rice producers who are supported by producer associations, allowing them to have some political weight and consequently greater competitiveness. For this reason, experiences under FTAs should be reviewed from a technical, economic and social cost standpoint.