Friday, July 21, 2017

Former U.S. President Bill Clinton told an overflow audience for the first-ever World Coffee Producers Forum July 11 that Medellin’s transformation from the world’s most violent city 25 years ago to a global leader in social innovation and progress might foretell what Colombia as a whole eventually could become.

Holding the prestigious World Coffee Producers Forum in Medellin would have been “unthinkable” in years past, because of the city’s bad reputation, he said. But Medellin -- where Colombia's Federacion Nacional de Cafeteros (the coffee-growers' trade group) was born 90 years ago -- has since become a beacon for hope, he added.

“Colombia could be unrecognizable in 20 years -- in a good way,” if wise social policy and “smart” investment continue to build upon the example that Medellin has set in recent years, Clinton told an overflow crowd of more than 1,000 forum delegates from 40 countries at the InterContinental Hotel here in Medellin.

Clinton likewise praised Medellin’s pioneering development of novel public-transit systems, which include outdoor escalators in mountainside neighborhoods, aerial trams, Metro rail, bus rapid transit (BRT) and free bicycles -- mainly serving the poorer and middle-class sectors of the city.

Positive results from “smart” urban social policy and investment similarly could be replicated via “smart” investment and development in rural areas – not just in the surrounding Antioquia department (which today has more than 80,000 coffee farmers) but also elsewhere in Colombia and world-wide, Clinton added.

Citing improvements from recent Clinton Foundation projects in Indonesia and Africa, Clinton pointed out that “smart” rural development -- using coffee as an “anchor” crop -- has been proven to reduce social conflicts and violence.

Expansion of “smart” coffee development in Colombia likewise could help to reduce coca-plantation acreage -- and the related violence and narco-trafficking that accompany coca production, he added.

What’s more, such “smart” coffee development also can help reduce deforestation, which has helped to preserve Colombia’s world-leading diversity in birds and orchids, Clinton added. Such preservation of forests, flowers and wildlife also can deliver big gains in profitable ecotourism, as Costa Rica has shown, he said.

However, Clinton cautioned that “smart” coffee development ought to incorporate crop diversification -- so that farmers don’t become too reliant on a single commodity that has a long history of price volatility.

This cautious message about over-reliance on coffee stood in contrast to emotional pleas here from presidents of several nations as well as producer-association leaders, all of whom urged the launch of aggressive campaigns aiming to convince multinational coffee buyers to redistribute a greater portion of their profits to coffee producers.

For example: Colombian President Juan Manuel Santos stated here that a cup of coffee retailing for US$3.50 at upscale coffee shops in Europe or the USA only nets Colombian coffee producers about US$0.05 – an “obnoxious” differential in share-of-profits, he said.

Columbia University (New York) economics professor Jeffrey Sachs added in a keynote presentation here that doubling this US$0.05 producer share-of-profits to US$0.10 (per cup of coffee) would make a huge difference for producer sustainability, while hardly affecting consumers.

While some sort of future, global agreement among coffee producers to restrict output theoretically might improve producer margins, it’s practically impossible to get the 60 producer nations to agree, Santos said -- citing the failed “Pancafe Fund” initiative of decades past.

While wholesale buyers of coffee today may enjoy relatively low acquisition costs, global coffee inventories have been declining as many former producers have quit the business, citing unsustainable margins and declining availability of farm-workers, Santos warned.

As a result, coffee today is more vulnerable to price spikes – which could result from (for example) a potentially disastrous frost event in Brazil, the world’s biggest-volume producer, he said.

“It’s in the interest of everybody [in the global coffee chain] for a friendly agreement to pay a better price to producers,” Santos argued. “And the social benefits to the world’s 25 million coffee farmers would be enormous.”

Meanwhile, the recent “peace” agreement between the narco-terrorist FARC organization and Colombia’s government opens big opportunities for future rural investment, Santos said.

Such investment potentially could boost Colombian coffee output from the 14 million bags/year (each bag weighing 132 pounds) sold in 2016 to 18 million or even 20 million bags/year, he said. 

While "global warming" could hurt future global coffee production because of an increase in damaging rains, hail, droughts or crop diseases, Andean coffee producers including Colombia, Ecuador and Peru are seen as less-vulnerable to such impacts than relatively low-lying Brazil, Santos added.

Starbucks, USAID Team-up to Help Colombian Coffee Farmers

On a related front, U.S.-based global coffee retail giant Starbucks announced July 10 in Medellin that it's contributing US$2 million to programs in partnership with the United States Agency for International Development (USAID) and the Interamerican Development Bank (IDB) to provide skills training and technological tools to 1,000 young coffee farmers and also help smallholder female coffee growers in Colombia’s "post-conflict zones."

Both of these partnerships will advance the work of the Starbucks "Farmer Support Center" in Colombia, which opened in 2012 "to help connect farmers with trained agronomists and technical assistance, and expand its 'C.A.F.E. Practices' program, which is Starbucks' third-party verified sustainability program developed with Conservation International more than 15 years ago," according to the company.

The USAID public-private partnership in Colombia first started in 2013 with a $1.5 million investment, according to Starbucks. That program "has helped positively impact 20,000 farmers and expanded the collaborative program to the Tolima, Cauca, Valle and Antioquia growing regions to benefit up to 10,000 more coffee farmers," the company added.


Medellin-based multinational utilities giant EPM announced July 7 that its 2.4-gigawatt “Hidroituango” hydroelectric plant project in Antioquia is now 70% complete – with an initial 300-megawatts (MW) of electric output scheduled to start at end-2018.

 The US$5.5 billion project – Colombia’s biggest-ever hydroelectric plant and its largest-single infrastructure project – is jointly owned by EPM and the departmental government of Antioquia.

Beyond the initial 300-MW generator, another seven turbine generators will be installed in stages between 2019 and 2021, when the plant reaches full capacity.

A 225-meters-high dam on the Rio Cauca is already 62% complete, while the underground area that houses the mechanical and transformer sections is now fully excavated, according to EPM.

“With EPM engineers and operatives, satisfactory progress has been made in the assembly of the hydromechanical and electromechanical equipment of what will be the new generation plant,” EPM general manager Jorge Londoño de la Cuesta said. “The construction of the main works is progressing in compliance with the schedule and with the commitment to deliver the first 300-MW to the country by the end of 2018.”

The Ituango hydroelectric project currently employs 11,247 – most from Antioquia, and only 24 foreigners, according to EPM.


Guatape Tour Boat Sinks; 9 Confirmed Dead

Monday, 26 June 2017 07:39 Written by

Antioquia’s disaster-recovery agency -- Departamento Administrativo para la Prevención, Atención y Recuperación de Desastres (DAPARD) – announced June 29 that the bodies of the last two persons missing from a boating disaster at Guatape lake have now been recovered by divers.

A total of nine passengers died in the June 25 sinking of the "El Almirante" tour boat. The bodies of Aura Estella Barragán Argumedo and Erika Quinchía were recovered by divers on June 28, according to DAPARD, while the bodies of seven others previously recovered were Martha Nora Gómez, María Hilda Idárraga, Edilma Barragán, Valentina Jaramillo, Lupe del Socorro Cantor Rodríguez, John Jairo Palacio Restrepo and Daniel Mora Ortiz, according to DAPARD.

"El Almirante" went down in Guatape lake with more than 150 passengers aboard, around 2:30 p.m. June 25. Most were rescued by nearby boats that witnessed the sinking. None of the passengers were wearing life-jackets.

A dramatic film of the sinking is available at this web site: http://www.semana.com/nacion/articulo/barco-que-se-hundio-en-guatape-ya-se-habia-accidentado/530006 .

“El Almirante” had suffered two other recent sinkings, but had avoided losses of life in those earlier incidents, according to numerous local press reports.

According to one report from Medellin-based daily newspaper El Colombiano, 13 other tour boats with three or four stacked decks -- similar to “El Almirante” -- are operated by Asobarcos at Guatape. Colombian law requires such tour boats to carry life-jackets and give them to passengers, the report pointed out. All the Asobarcos boats have now been suspended from operations pending further investigations by authorities.

Guatape -- just two-hours' drive from Medellin -- is a popular weekend destination for boat trips, for browsing the food-and-trinkets kiosks along the Malecon (waterfront), and for strolling through the picturesque town with its characteristic "zocalo" sculptures that adorn most of the houses. 


Medellin’s three public agencies charged with promoting foreign investment, conventions and tourism announced in early June that they’ve developed a strategy to coordinate and boost promotional efforts.

 

The Medellin Convention and Visitors Bureau, the Agencia de Cooperación e Inversión de Medellín y el Área Metropolitana (ACI Medellin) and the Plaza Mayor convention center management jointly announced what they’re calling “articulated strategies for the internationalization of Medellín.”

The scheme initially includes an expanded, joint board of directors and the appointment of Juan Santiago Elejalde Escobar as general manager of Plaza Mayor, Medellin’s main convention center.

“A strategy will be implemented to jointly promote the image of Medellín as a business [oriented] city, [as well as] competitive, innovative, sustainable and with a high quality of life,” according to a joint press statement from the three agencies.

“It was agreed to promote an awareness program on the importance of meeting and event tourism for Medellín, generating talks with all the actors of the service chain, both public and private and regional alliances with other Bureaus and convention centers of other cities to improve the management of the destination and the international positioning.”

The Bureau also touted recent convention successes, including 87 events captured for Medellín in 2016 and another 23 captured in the first months of 2017.

Meanwhile, according to the most recent International Congress and Convention Association (ICCA) annual report, Medellin rose to the top of all major cities throughout the Americas in convention growth over the past 10 years.

According to ICCA figures obtained by Medellin Herald, Medellin rose from just 10 convention events in 2007 to 42 in 2016, or 320% growth.

After Medellin, the top-24 cities in ICCA-measured convention growth in the Americas over the past 10 years were (in descending order): Lima, Panama City, Mexico City, Bogota, Washington DC, Miami, Orlando, Cartagena, San Jose, Montevideo, San Francisco, New York City, Chicago, Boston, Toronto, Santiago de Chile, Seattle, Sao Paulo, Buenos Aires, Montreal, Cancun, Rio de Janeiro and Vancouver.

While Medellin is showing impressive growth, it’s still far behind the world’s top-10 -- Vienna, Seoul, Barcelona, Copenhagen, London, Amsterdam, Paris, Rome, Beijing and Singapore -- in terms of total participants at conventions, according to the ICCA study.

Meanwhile, Plaza Mayor management separately announced June 14 that the city of Medellin approved another COP$1.5 billion (US$500,000) for modernization of facilities at the convention center this year.

Upgrades include creation of a new conference hall in the exhibition area, bathroom improvements, LED lighting installations in the Great Hall, a new audio-video system and new furniture in the VIP zone and the Hall of Conventions.


In a June 7 forum organized by Agencia de Cooperación e Inversión de Medellín y el Área Metropolitana (ACI Medellin), ACI director Sergio Escobar revealed that Medellin and its metro area so far have attracted US$1.63 billion in private foreign direct investment (FDI) over the 15-years of ACI’s existence.

 At the forum, Ambassadors to Colombia from France, Italy, Israel, Brazil and Peru as well as trade-and-commerce representatives from the U.S., UK, Japan, Spain and Canada along with private investors from 24 nations heard presentations from Medellin Mayor Federico Gutierrez and other leading trade-and-investment experts.

Last year alone, Medellin attracted US$211.6 million in FDI along with another US$5.8 million in cooperative grants or loans aimed at promoting economic development, education, health and environmental protection, according to ACI’s Escobar.

The U.S. is the number-one investor in Colombia, followed by the UK and Spain, Procolombia president Felipe Jaramillo added in a separate presentation here.

While a pending “peace” deal with the narco-terrorist FARC organization seems to be making progress, Colombia also would benefit from joining the Organization for Economic Cooperation and Development (OECD), Jaramillo said. So far, 21 of the 23 committees overseeing Colombia’s application for OECD membership have given their nods, with the remaining two likely to give the final stamps-of-approval in the next few months, he added.

On a related front, the United Nations Conference on Trade and Development (UNCTAD) released a report June 7 showing that Colombia was the only major country in Latin America that achieved an actual increase in FDI in 2016 -- hitting US$14 billion -- whereas FDI in Brazil, Mexico, Chile and Peru and Venezuela actually saw FDI shrink.

“We were considered a ‘closed’ city 15 years ago,” ACI’s Escobar said in his presentation here. However, thanks to Medellin’s remarkable turnaround in reducing crime, a growing reputation for social innovation, plus aggressive recruiting efforts by ACI, Medellin’s political and business leaders, and the Procolombia trade-and-investment agency, the picture has dramatically improved.

“We were the most violent city in the world in 1991,” Mayor Gutierrez pointed out in his presentation. “We had to reinvent ourselves.”

Medellin’s murder rate per 100,000 residents hit an astronomical 370 in 1991. But since then, aggressive measures in social investment, crime control, infrastructure development and economic investment have helped to bring the murder rate down to 18.9 per 100,000, well-below scores of other major global cities, he showed.

One of Medellin’s most popular landmarks for “narco-tourism” – the long-abandoned Edificio Monaco developed by the late drug lord Pablo Escobar – will be demolished and replaced by a park honoring victims of narco-terrorism, Gutierrez announced here to loud applause.

Meanwhile, Medellin’s public-school educational system continues to improve, with 88% of those schools improving their test-of-knowledge (“saber”) scores last year, he said.

In addition, local business leaders are communicating to school and government leaders here on their specific needs for skill development for tomorrow’s jobs, he said. As a result, Medellin will be offering more than 10,000 special scholarship grants for these growing, high-demand careers, he said.

Of the more-than 92,000 commercial companies in Medellin today, 19% of these companies are industrial, Gutierrez said. In total, of the more-than 1 million jobs in Medellin, about 190,000 are industrial jobs, he added.

Medellin and Antioquia’s well-known reputation for business “push” and work-ethic were among key factors for Renault’s decision to build its automotive assembly plant in the neighboring suburb of Envigado some 50 years ago, Renault-Colombia government relations director Pablo Urrego added here.

With more than 50 years experience building cars here, Renault since has risen to become Colombia’s biggest vehicle exporter, accounting for 40% of total output, Urrego said.

The “paisas” (the people of Antioquia) “have an enormous capacity for innovation,” he said. “You can see it here, not just in business but in social projects. There is civic pride here in institutions and in companies. We have strong institutional support -- and very low turnover [in employees].

“But infrastructures [especially highway, rail and ports] haven’t grown as fast as the business” -- with the result that freight transport in Colombia and Antioquia is too expensive. In addition, “the absence of a national industrial policy complicates our investment outlook,” Urrego cautioned.

Similarly, France-based cosmetics and food-additives manufacturer Mane decided to invest in Medellin 17 years ago mainly because of the area’s favorable “human factors” -- even “despite all the problems,” Mane general manager Alejandro Henao said here.

“It’s relatively easy to do business in Medellin -- and the local Chamber of Commerce helps a lot” in navigating the process of licenses and approvals, he added.

Because of continuing favorable economic growth, middle-class growth and rising demand here, “we have increased our production capacity here.”

However, Medellin and Antioquia need to ensure the completion of major highway and port development projects including the “Mar 1” and "Mar 2” highways to new ports on the Atlantic. More efforts also are needed to slash the growth of air pollution in the Uraba Valley where Medellin sits, he added. Declining air quality could hobble or even stop investment growth here, Henao warned.

On a related front, France-based Poma – designer, maker and installer of zero-emissions aerial tram (cable car) systems – similarly decided to bet heavily on Medellin despite its historic problems.

As a result, the world’s first public-transit aerial-tram system debuted here in 2002 -- and continues to expand in more neighborhoods, as noted by Poma Colombia director Frederic Demoulin. “We’re proud pioneers -- and history shows this has been a winning bet,” with Poma now expanding its pioneering public aerial-tram systems to Ecuador, Brazil and France, he added.


The International Monetary Fund (IMF) announced in a report issued May 31 that Colombia’s economy is starting to rebound – and it’s performing much better than its neighbors following the oil-price collapse nearly three years ago.

As a result, real gross domestic product (GDP) growth would rebound to 2.3% this year, up from 2.0% last year, according to the report.

Inflation as measured by consumer price index (CPI) is expected to fall to 4.5% this year, down from 7.5% last year, while current-account deficit is seen dropping to 3.8% of GDP, down from 4.4% last year, according to the report.

“In 2016, Colombia continued a remarkably smooth adjustment to a combination of large external and domestic shocks, with economic growth outpacing regional peers and achieving further improvements in poverty and inequality,” according to the report.

While GDP growth slowed in 2016 versus 2015 due to falling oil revenues, weak demand from neighbor countries and higher inflation, “Colombia faces a favorable outlook underpinned by the peace agreement and the structural tax reform together with the authorities’ infrastructure agenda,” according to the report.

“Economic activity will rebound slightly this year as investment will strengthen boosted by reduced corporate taxation and confidence stemming from the peace agreement.

“Non-traditional exports are gaining steam in part due to ongoing efforts to reduce trade barriers and this will contribute to bring the current account deficit to its equilibrium level.

“Medium-term growth will be driven by economic diversification away from oil, which will benefit from the infrastructure agenda and the peace agreement that will improve ompetitiveness and regional development.

“Risks to this outlook are to the downside with the main near-term risk stemming from the still large (but moderating) external financing needs. Domestically, while the banking system appears sound and broadly resilient to shocks, some pockets of corporate vulnerability have emerged.

“On the upside, a faster-than-expected implementation of the peace agreement could strengthen medium-term growth even more.

“Going forward, inclusive growth will depend more on diversification supported by structural reforms including on improving infrastructure, streamlining regulation, easing trade barriers and strengthening the efficiency of public expenditure. The tax reform will boost medium-term inclusive growth by allowing a strengthening in public investment and social spending,” IMF concluded.

IMF’s near-term outlook is for a “gradual growth pickup,” according to the multilateral agency.

IMF “projects growth to increase to 2.3% in 2017 as the economy gradually diversifies away from commodities. Lower inflation will partly offset the drag on private consumption from the VAT [value-added tax] increase while investment is expected to pick up in the second half of the year.

“Credit growth will be subdued as lending standards tighten in response to somewhat weaker corporate financial strength and due to softening consumers’ credit demand. Medium-term growth of about 3.5% will be underpinned by non-commodity exports, infrastructure spending, and improved confidence stemming from the peace agreement.

“The current account deficit is projected to narrow further in 2017 and gradually converge to its medium-term equilibrium. Additional import compression due to sluggish domestic demand, improved tourism receipts, and growing non-traditional exports will reduce the deficit to 3.8 % of GDP in 2017,” the report concludes.

 


The just-released report from the Colombian national “Como Vamos” (“How are we Doing?”) network of citizen surveys finds that Medellin is perceived as best among major cities for over-all quality of life, while Bogota is worst.


Medellin-based multinational grocery retailer Exito on May 16 posted a tiny COP$7.6 million (US$2,600) net loss for first quarter (1Q 2017), down slightly from an even more miniscule COP$760,000 (US$260) net profit in 1Q 2016.


Medellin-based multinational foods giant Grupo Nutresa announced May 19 that it won an “AAA(col)” rating from Wall Street bond rater Fitch thanks to its “strong competitive position in its relevant markets” as well as moderate leverage, geographic diversification and “robust” cash flow “across the business cycle."


The people of Medellin, the surrounding Antioquia department and all of Colombia have been the victims of a 60-years-long civil war -- provoked mainly by communist guerillas -- that has resulted in more than 220,000 documented assassinations, thousands of kidnappings, forcible displacement of more than 6 million, massive narco-trafficking, and a consequent socio-economic catastrophe that to this day continues to stifle lives and opportunities for millions.


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SILLETEROS PARADE 2016 by JOHN AND DONNA STORMZAND (click to enlarge)

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About Medellin Herald

Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

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