Colombia rebels selling cows as drug money drops: Santos

BOGOTA (Reuters) - Colombian President Juan Manuel Santos said on Monday the country's largest rebel group was increasingly selling its cattle to finance South America's longest-running insurgency as income from trafficking cocaine drops.

Colombia's Revolutionary Armed Forces of Colombia, or FARC, has been reeling from more than a decade of a U.S.-backed military offensive that has dealt it major blows and cut cocaine output in one of the world's top producers of the drug.

"The FARC is designing a complete strategy to counter the problem of lack of financing ... due to the blows to their funding sources, especially drug trafficking. One of the orders was to sell cattle to get more resources," Santos said.

The FARC has been trying in recent weeks to sell cattle stolen in other regions of the country, Santos said in a speech in the southern province of Caqueta.

The rebels have for decades funded their movement through control of coca production and have built up ties with drug gangs in some parts of the country and fought for control over key routes and supplies in others.

The billions of dollars a year in cocaine money has been one of the main reasons why Colombia's war has continued for nearly five decades and its political system has been rocked by scandals of collusion between officials and gangs.

Santos is responsible for some of the harshest blows against the FARC - first as defense minister and then as president - including killing the group's leader Alfonso Cano in November.

Strikes against the FARC since 2002 have severely weakened the rebels' ability to launch attacks on the country's economic infrastructure, while better security has helped attract billions of dollars in foreign investment.

Colombia's steps to improve security, however, mask deep-seated issues like unequal land distribution, rural poverty, flourishing criminal gangs and weak institutions.

Santos has pushed through a range of reforms to tackle structural economic defects that prompt support for the FARC such as returning land stolen by right-wing paramilitaries and rebels to displaced peasants.

Despite being at its weakest in years, the FARC still carry out ambushes and bombings.

On Friday, rebels were suspected by police of detonating a car bomb in Catatumbo in Norte de Santander province, which is along the border with Venezuela in an area where new FARC chief Timoleon Jimenez or "Timochenko" is believed to be operating.

Both guerrillas and the government have called for peace but Santos says the Marxist rebels must first take steps they want peace, such as releasing hostages and stopping attacks. The FARC has refused to disarm.

Various peace efforts in Colombia since the 1980s have brought mixed success, with some smaller illegal armed groups demobilizing, but the FARC has pressed on.

"The government does not have any indication nor demonstration at this time that can convince us of the good will of the other party in reaching a peace agreement," Santos said.

"Action by the security forces will be strong and remain strong."

(Reporting By Jack Kimball; Editing by Philip Barbara)