Sunday, December 15, 2019

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Colombian music star Carlos Vives first gained international fame in 1993 by bringing traditional vallenato music to the whole world, via the sensational hit-single, “La Gota Fria.”

Ever since, Vives’ pioneering group “La Provincia” has frequently topped the Latin American pop-music charts -- as well as popular music-video internet links.

Besides winning numerous Grammy awards, Vives and La Provincia have over the past 25 years garnered huge followings at live performances in many countries far beyond Colombia.

Now, with his brother Guillo and Mexican multinational restaurant investor Mera Corporation, the Vives brothers just brought a traditional-foods “Gaira Café” to the international departures area at Medellin’s Jose Maria Cordoba (JMC) international airport – with a second, Medellin-city “Gaira Café” location on the horizon, brother Guillo told Medellin Herald.

In a September 9 press conference at JMC attended by scores of TV, radio and print journalists, the Vives brothers lectured, sang and showed-off their newest Gaira Café location here -- their third nationally, and all featuring traditional foods from Colombia's Caribbean coast, where the Vives brothers were born.

The brothers first launched Gaira Café 20 years ago in Bogota -- initially as a restaurant -- and then later added a third-floor musical auditorium, which continues to feature some of Colombia’s top emerging pop-rock artists.

While the JMC location is only open to ticketed international passengers -- hence not ideal for attracting spectators to concerts like those at the Bogota city location – it will nevertheless on occasion bring trios or other music groups for impromptu performances at JMC, according to the Vives brothers.

Following the press event here, Mera Corporation president Rafael Aguirre explained to Medellin Herald that his company is investing US$10 million in several restaurants (including slots at JMC) – of which about $1 million went into the latest Gaira Café.

The Mera investments at JMC also include a new Juan Valdez café, an Amazonia Café, a Petit Gourmet restaurant, a Guy Fieri Burger Joint outlet, a Mondongo’s café, and a craft-beer service.

Mera is also eyeing the possibility of opening a Mexican restaurant in the under-construction balcony section at the international-departures area at JMC, Aguirre told us.

The first collaboration between the Vives brothers and Mera came in 2018 at Bogota’s El Dorado airport, involving the second-ever Gaira Café. Along with a Guy Fieri restaurant, a Wolfgang Puck restaurant, an Amazonía Café and a Guacamole Ándele restaurant, all these outlets together form what Mera calls the “Zona R” food court at El Dorado.

In a related presentation at the JMC press event, Colombia’s Transportation Minister Angela Orozco praised Mera's growing investments here. Mera and other investors at JMC have now transformed the international-departures area with a dizzying array of colorful shops and a wide variety of consumer enticements.

The new investments would seem to have favorable prospects, as not only has Medellin seen a huge surge of international tourist numbers (especially in the last five years), but also Colombia nationally now expects that its airports will see some 100 million tourists annually by 2030, Orozco revealed.

Such tourist numbers -- staggering by Colombian historical standards – will require billions of dollars of continuing investments in airport and highway infrastructure, including the “fourth generation” (4G) highways now under construction in Antioquia and nationwide, Orozco added.


Big corporate fleets in and around Medellin and across Colombia increasingly are turning to sophisticated vehicle technologies in order to avoid accidents, cut fuel costs, avoid merchandise damage, monitor driver behavior and improve routing.

Among local fleets employing and/or evaluating novel “Mobileye” and “Ituran” systems are insurance giant Sura, cement maker Cemex, supermarket leader Exito and soft-drinks maker Postobon.

These advanced vehicle/driver/road-status technologies -- created and developed in Israel -- are being marketed in Colombia by Medellin-based Eletech SA.

In an interview with Medellin Herald, Eletech SA operations director Victor Meir Avraham explained the evolution of these technologies -- and their growing applications here in the Colombian market.

While many Colombian fleets employ relatively simple global positioning system (GPS) technologies to track individual vehicle movements, the Mobileye and Ituran technologies go far beyond those.

The more-advanced technologies incorporate sophisticated cameras, warning lights-and-sounds, facial recognition technology (detecting driver distraction and drowsiness), two-way telecom systems for emergency communications, and computer programs that automatically digest and analyze vast amounts of crucial data for relatively easy fleet-management evaluations of driver and vehicle behavior.

Bringing advanced Israeli technology to the Colombian fleet-vehicle market has proven to be a “perfect match” -- with huge growth opportunities on the horizon, Avraham explained.

Mobileye – bought by U.S. computer-technology giant Intel in 2017 for US$15.4 billion (the biggest-ever corporate acquisition in Israeli history) – gave Intel a key entryway into the vast global vehicle market, including the futuristic “autonomous vehicle” business, Avraham said.

The Mobileye technology being offered in Colombia can be used by any sort of vehicle, including cars, trucks, buses and motorcycles, he said.

Mobileye systems for distracted-driver alerts include lane-departure warning, headway monitoring and warning (to avoid tailgating and rear-end crashes), pedestrian collision warning, speed-limit detection and warning, and driver fatigue warnings, he showed.

In-development is a newer Mobileye system that eventually will detect and report potholes in roads, broken traffic lights and other highway infrastructure problems – following which these detections will be sent wirelessly to government highway departments, in real time. The same system eventually will create highway mapping systems that will be useful for the next generation of autonomous vehicles, he added.

Ituran: Telematics, Fleet-Management Analysis

While Mobileye is a stand-alone system on the vehicle, Eletech pairs it with Ituran technology, which (among various features) enables fleet managers to analyze driver and vehicle operations, with dozens of possible plug-in options.

Among the systems that can be run by Ituran is a “pin-type” keyboard that enables recognition of each individual driver of a fleet vehicle.

Yet another system -- termed “safety” -- is like an airplane “black box” that can record all safety issues, accidents and even automatically call the fleet manager operations center to report an accident (if for example the driver is knocked unconscious and hence unable to call).

Another aspect of this technology is a loop-cycle camera system that records what happened inside and outside a vehicle immediately before and after an accident. Those recordings, automatically uploaded to the cloud, can be useful for determining fault in any accident.

A plug-in cell-phone system also can be incorporated for hands-free, two-way communications between the driver and fleet management.

Yet another novel option is a cargo-bay thermometer system for refrigerated transport, which alerts the driver and fleet management of temperature anomalies that could damage goods in transit. This is especially useful for food and dairy transporters, for example.

Another system records fuel consumption, oil consumption and vehicle refueling behavior that can detect poor driving habits -- or possible diversion of fuel into a portable fuel container or another vehicle.

Yet another technology feature issues a mild warning sound for a moderate excess of vehicle speed, and a harsher sound for greater excess speed -- combined with an “eye flash” camera that monitors traffic cameras so that the fleet can avoid costly speeding fines.

The telematics system in these technologies enables a fleet manager to monitor every vehicle in real time, as well as to receive periodic, automated reports on driver and vehicle behavior, including reckless driving, excessive stop-times at pickup/delivery points, questionable refueling, prohibited stops, prohibited routes or prohibited openings of cargo doors.

“Ituran is ‘big data,’ what many call the ‘new gold,’” Avraham explained. “This is what differentiates Israeli technology” from other competitors, he added.

“Every vehicle can generate 10 gigabytes of data each month – every braking event, every acceleration, every turn, every speed, every traffic violation. But most of that is too much data” for practical fleet-manager evaluation.

“So, Ituran turns that 10 gigabytes into 40 or 50 megabytes of useful data, sent to the cloud. Not many companies can do this; it’s high-level telematics and analysis.”

For example, the recent “Vision Zero” pedestrian-accident-reduction initiative (in Europe and especially in Sweden) has been a “huge success” because of telematics analysis, he said.

These technologies gather and analyze city-wide accident data, by day and time-of-day -- and then show the high-risk areas on a computerized, interactive map, so that fleet managers can help design routes to avoid such high-risk areas at certain hours.

These technologies also identify the highest-risk and lowest-risk drivers among the fleets, by automated scoring systems showing which driver too-often drives at excessive speed, or tailgates, or aggressively brakes and steers.

The end-result: computerized “report cards” on each driver, with “green,” “yellow” and “red” computerized colors used to indicate good, mediocre and dangerous behavior. Such reports can help managers coach drivers on better behavior -- and if coaching doesn’t work, then justifiable firings can result.

Since some fleets may employ dozens or hundreds of drivers, such a computerized system can vastly improve over-all fleet operations-- and save vast amounts of management time by enabling early detection of driver-behavior trends that could lead to costly safety problems later.

On a related front, a cell-phone application available with the Ituran telematics system not only enables fleet managers to monitor and evaluate fleet-vehicle drivers, but also could enable individual car owners (such as a parent loaning a car to a son or daughter) to monitor behaviors.

Such technology is already being used in fleet applications here, but it could spread to the general population in future.

Eventually, the Ituran system also potentially could help bring about “usage-based insurance” (UBI) for individual car drivers here --still a novel concept in Colombia, in contrast to its common usage in North America, Europe, Israel and elsewhere, he said.

Colombian car insurance typically is based upon the vehicle value rather than the driver’s actual behavior, he said. In contrast, UBI analyzes personal driver risk, which could prompt insurance companies to offer premium discounts to good drivers, or penalties for poorer drivers.

“We’re trying to implement this with Sura in Colombia – it’s a six-month project, to see what best fits Sura needs for Colombian conditions” for individual car drivers, Avraham said.

“This would revolutionize Colombian transport if it applies to individual car drivers, and not just fleet vehicles,” he added.

 


Antioquian coffee growers, marketers, cooperatives, trade associations, educators, governments and the Medellin Chamber of Commerce for Antioquia (“CCMA” in Spanish initials) are brewing-up a remarkable initiative that aims to percolate a more-profitable “specialty coffee” business -- both locally and world-wide.

At the third “Café Fina Experiencia” conference August 28-29 at CCMA-Poblado here in Medellin, more than 300 attendees -- including coffee growers, processors, marketers, cooperatives, researchers, roasters, consultants, exporters, importers and international experts -- delved into the challenges and opportunities in specialty coffees.

That’s about triple the number of attendees to the first edition of “Café Fina Experiencia” -- an encouraging sign, indicating a potentially brighter future for an emerging class of more-sophisticated, more-entrepreneurial growers and marketers.

Given the tremendous growth of “Café Fina Experiencia,” 500 or more attendees probably will participate in the next edition, as “Café Don Tulio” owner Juan Leonardo Garzon Restrepo predicted in closing remarks here.

Numerous experts here cited a dead-end ahead for those producing “commodity coffees” that generate only about US$1 per pound (often less) for the “commodity” grower – or less-than half of today’s actual cost of production here in Colombia.

On the other hand, the specialty coffee market by some estimates is on pace to hit nearly US$40 billion/year globally, with the U.S. and Europe accounting for the bulk of that, as San Francisco-based coffee roaster specialist Floy Andrews of Bay Area Co-Roasters explained here. A recent analysis by Dallas-based Adroit Market Research added that the global specialty coffee business likely would hit more than US$83 biliion by 2025, up from an estimated US$36 billion in 2018.

Meanwhile in Germany, 900 local roaster operations and 72,000 specialty coffee shops have sprung-up around the country – and 82% of those shops are independent rather than chain outlets (such as Starbucks or Peets), as Ally Coffee market representative Nicole Pilz explained here.

The challenge is for Colombia's specialty coffee growers to get a bigger, sustainable share of those dollars. “People will pay for quality and brand and fair trade – but it’s very difficult to know how much is paid to the farmer,” Andrews pointed-out here.

'Circular Integration'

What local coffee growers need to create is what Selvadentro coffee consultant Arturo Arevalo termed here as “circular integration” – that is, cooperative alliances between specialty coffee growers, buyers, marketers, exporters, importers, roasters and retailers.

Such “circular integration” potentially could enable local growers stand-up to the “big five” global coffee traders who have gradually developed “vertical integration” – including strict cost and price controls from farming to processing to transport to roasting to retailing.

Today, it’s not enough to put “organic” or “rainforest” or “French roast” or “dark roast” or “mild” or country-of-origin labels on packaged coffees -- and then expect to see profits pour-in to coffee growers, who usually get the smallest portion of each dollar spent on a cup of coffee, as experts explained here.

Even the traditional “Juan Valdez” marketing image created over decades to promote Colombian coffee by itself isn’t delivering enough extra margin today to ensure the survival of "commodity" Colombia coffee farmers, according to the experts.

However, many more consumers -- especially in Europe, Japan, North America, and even in China -- increasingly are becoming aware of the many different flavors of different specialty coffees, which result from different types of coffee beans, different types of processing and different types of roasting, as experts explained here.

In addition, more younger-generation consumers are starting to demand to know what price is being paid to the coffee grower, as Ally Coffee's Pilz explained in a presentation here.

While traditional coffee-grower trade associations continue to lobby major retail marketers and giant international coffee buyers to pay higher, “fair trade” prices for all coffees (with insufficient results to date), there’s another pathway out of the “commodity-coffee” dead-end: convert more production to higher-margin, better-defined, better-branded specialty coffees, according to experts here.

That’s why CCMA and the “Coffee Cluster” of Antioquia are in the process of developing an initiative that ultimately aims to launch specifically recognized Antioquian specialty coffee brands -- along with new marketing opportunities -- for potentially thousands of formerly “traditional” coffee growers.

Too many smaller coffee growers today are stuck in the “commodity” coffee cycle, producing perhaps only one or two varieties at too-cheap prices, according to experts.

On the other hand, some more-sophisticated Antioquian growers already produce more than a dozen specialty varieties, including (for example) the ultra-high-margin, but relatively low-volume “Geisha” variety.

What’s more, some of these advanced growers are combining specialty coffee production and marketing with eco-tourism, as for example “La Virgen de Oro” (near Tamesis, Antioquia); “Café Don Tulio” (near Ciudad Bolivar, Antioquia); “La Palma y El Tucan” (in Cundinamarca); “Hacienda La Pradera” (in Santander); and the new “Red Ecolsierra” farm-and-ecotourism network (in the mountains above Santa Marta).

Bird Tourism Pairs With Specialty Coffee

“La Virgin de Oro” owner Jorge Mario Correa told Medellin Herald that besides the 16 specialty coffee varieties he’s producing and marketing, he’s now seeing ever-more growth in bird eco-tourism at his novel eco-farm, which attracts the threatened Cerulean Warbler (Setophaga cerulea)-- along with dozens of other species -- during the spectacular northern boreal migratory season to Colombia (October to April).

However, not every coffee farm should be considered suitable for eco-tourism, as upscale hotel infrastructure investment can be prohibitive for many farmers, as experts explained here.

Nor would it be wise for every farm to abandon production immediately of all “traditional” coffee and attempt a wholesale switch to exclusive production of certain higher-margin specialty varieties, experts warned. Not only would such a switch take years until first harvest (and first revenues), but also future margins on certain “trendy” varieties could be unpredictable -- and might not pay-off the original investment.

However, the new Antioquian specialty-coffees education, branding and marketing initiative spearheaded by the Coffee Cluster aims to help more traditional coffee farmers gradually dedicate more production to specialty coffees -- in order to boost profitability and sustainability, while also including dependable buyers.

While the Antioquia specialty coffee initiative is gaining steam, remaining challenges can include recruiting more specialty coffee retailers in higher-margin export markets, as Jerico, Antioquia coffee grower Sandra Castaño explained to Medellin Herald.

One successful example Castaño cited is the “Devocion” Colombian specialty coffee retailer in Brooklyn, New York, founded by Medellin native Steven Sutton.

Another challenge: developing the next generation of Antioquia specialty coffee growers, which explains the emergence of the “PEC” (Programa Educativa del Café) initiative, first organized in 2018 by CCMA along with the Café Cluster, Comfama, SENA, the Antioquian Coffee Committee (Comite Cafetera de Antioquia), the Laboratorio de Cafe and others.

As “PEC” program coordinator Liceth Meneses (CCMA) explained to Medellin Herald, the program aims to help the next generation of Antioquian coffee farmers learn about specialty varieties, as well as help them improve their entrepreneurial and technological skills -- which will include environmental sustainability methods.

On a parallel front, too many Antioquia coffee producers still have much to learn about boosting productivity, as “Solidaridad Network” consultant Carlos Isaza explained in a presentation here.

While labor represents more than 70% of the operating cost of coffee farming, just having cheaper labor -- as in Nicaragua, where coffee-farm day-labor is about one-third the cost of Colombian day-labor –  doesn't guarantee success, he showed.

Ironically, coffee farming is drastically declining in many cheap-labor Central American countries -- except for Costa Rica and Panama, where specialty coffee production and marketing rather than cheap labor has become a salvation for many farmers, he pointed out.

20 Antioquian Coffee Varieties

For the “Café Fina Experiencia” conferences, CCMA so far has catalogued some 20 different varieties of coffee produced in Antioquia, including Borbon, Castilla, Caturra, Variedad Colombia, Pajarito, Chiruso, Cenicafe1, Geisha, Matra Gojo, Catimor, Moka, Sudan Rume, Typica, Margogipe, Java, Arabica, Wush Wush, Catuai, Sl28 and Variedad 2000.

While most coffee farmers might produce only one variety, Medellin’s remaining rural districts still host more than 520 coffee producers, as Medellin’s secretary of economic develop Paula Andrea Zapata Galeano pointed out in a presentation here.

What’s more, another 93,000 coffee farms continue to operate in other areas of Antioquia, producing about 1.5 million bags (154 pounds per bag) per year.

Now, the challenge for many of these traditional farmers is how to convert to specialty coffee production -- and climb aboard a “circular integration” train to higher profitability.


A growing list of major local and international companies operating in and around Medellin and throughout Colombia are turning to a novel “Portafolio Verde” (“green portfolio”) consultancy here for projects that are both “green” environmentally as well as financially.

“Portafolio Verde” finds, designs and jump-starts innovative, sustainable environmental and social projects -- some of which can serve as legally required “offsets” to environmental impacts from certain industrial developments.

In a presentation to the recent Proantioquia forum here on sustainable development, Portafolio Verde executive director Alejandro Zapata cited numerous such projects over the 14-year history of the organization.

Among the newest projects are under the umbrella of Portafolio Verde’s one-year-old “Animal Bank” initiative.

“Animal Bank” helps find, develop and finance -- tapping corporate or individual-donor seed money -- suitable biodiversity projects, and then helps train local people and organizations to continue executing such projects.

Also under the “Animal Bank” umbrella is the “Tierras Con Proposito” (“Lands with Purpose”) program, which finds and then matches willing landowners with corporations seeking suitable environmental-impact “offset” projects.

“Through Animal Bank, we seek to support projects focused on conservation and biodiversity, in this way supporting social, environmental and economic development in our region and in our nation,” Zapata explained in his Proantioquia presentation here.

Candidate lands for “Tierras Con Proposito” must have biodiversity and conservation potential.

Such lands would (for example) host natural springs or wetlands; serve as “buffer zones” adjacent to environmentally protected areas; have some strategic importance such as location in highland paramos or tropical dry forest; serve as homes to threatened flora and fauna; and have potential for hosting sustainable forestry, animal husbandry, beekeeping or similarly non-destructive activities on part of the land.

Following Zapata’s Proantioquia presentation, Animal Bank and “Tierras Con Proposito” coordinator Carolina Castaño Restrepo explained to Medellin Herald in a follow-up interview many of the key underlying principles and mechanisms involved in such projects.

If for example some company proposes to develop an industrial or mining project on certain lands that are now legally declared as environmentally sensitive, then Animal Bank would help find a matching, privately-owned parcel somewhere else that either will be purchased by the corporation -- or else extended some type of finance or incentives for “green” preservation or restoration -- of some-or-all of the parcel.

Unless the land is purchased, the original owner could still keep the land -- but then avoid any sort of environmental damage such as logging, mining, cattle grazing or industrial development on specified, dedicated acreage – at very least during the term of the restoration or preservation contract.

In this sort of transaction, Animal Bank could earn a commission on what might be considered something like a real-estate deal. But there’s a difference: the main driver to the transaction is environmental protection rather than conventional “use” of an “offset” property.

“Tierras Con Proposito” could include lands that (for example) currently are partly dedicated to farming or ranching, but with at least part of the land in a natural state -- hence aiding biodiversity and environmental conservation.

One such land cited on the Animal Bank web-site is a former cattle ranch near El Retiro, Antioquia, now considered as having potential for eco-tourism. Another property historically dedicated to ranching in San Pedro de los Milagros, Antioquia, is listed on the web site for potential preservation of native forest and water resources.

While this particular parcel in San Pedro de los Milagros isn’t specifically identified on the Animal Bank web-site as a potential site for conservation of the endangered Antioquia Brush-Finch (Atlapetes Blancae) bird, it’s notable that there is now an extraordinary potato farm near San Pedro de los Milagros that just started offering birdwatching-ecotourism, with high probability of seeing this extremely rare bird at this specific site.

Other potential projects cited on the Animal Bank web-site – but looking for matching partners -- include conservation of the endangered Blue-Billed Curassow (Crax Alberti) bird as well as the endangered Andean Condor (Vultur Gryphus).

Meanwhile, a successful freshwater-turtle conservation/ecotourism project in Cocorna, Antioquia – with project design and management training provided by Animal Bank – has won financial aid from Medellin-based Grupo Argos, a multinational corporate giant in cement, electric power and highway/airport concessions.

Other founding allies of Animal Bank include Canada-based, environmentally responsible gold miner Continental Gold (developer of Colombia’s biggest new gold mine in Antioquia); the “Renting Colombia” vehicle-leasing division of Medellin-based banking giant Bancolombia; Vanderbilt University (USA); Turner Family Center for Social Ventures (USA); and corporate social-responsibility advisor B Lab (USA).

To date, "Tierras Con Proposito" has already registered 150,000 hectares of various farms and ranches in Colombia -- all ready for matching with a suitable corporate project development for environmental “offsets” or (in some cases) possible ecotourism projects.

What’s more, based on projections from the growing popularity of the program, “Tierras Con Proposito” aims to grow to a staggering 11 million hectares registered-and-ready over the next five to 10 years -- all over Colombia -- according to Portafolio Verde executive Alejandro Zapata.

Interested parties in Animal Bank and Tierras Con Proposito potentially could include all sorts of investors (not just big corporations), as program coordinator Carolina Castaño explained to us.

For example: A company, individual or an organization might be interested in developing an ecotourism hotel at a candidate site. Tapping its database, Animal Bank wouldl analyze the proposal and search for a potential, suitable site, which would include follow-up verification of the actual status of flora and fauna for possible ecotourism.

Individuals also can contribute to Animal Bank, as for example through the allied “100 Apasionados por la Fauna” group. Animal Bank asks such individual donors to contribute at least COP$3 million (about US$875 at current exchange rates) per year.

The organization also continuously employs social media, public events and news-organization interviews in order to reach-out to more landowners interested in registering their properties, as well as companies, corporations and individuals interested in collaborating on its many-varied projects.


Medellin-based multinational paper products and personal-hygiene specialist Grupo Familia revealed in an August 20 filing with Colombia’s Superfinanciera corporate oversight agency that its first half (1H) 2019 net income rose to COP$126 billion (US$37 million), up from COP$98 billion (US$28 million) in 1H 2018.

Gross revenues also rose, to COP$1.28 trillion (US$374 million), from COP$1.14 trillion (US$333 million) in 1H 2018. Operating earnings likewise rose to COP$190 billion (US$55 million) versus COP$153 billion (US$45 million) in 1H 2018.

As for second quarter (2Q) 2019, gross revenues rose to COP$667 billion (US$195 million) versus COP$578 billion (US$169 million) in 2Q 2018, while operating earnings rose to COP$88 billion (US$25.7 million) versus COP$73 billion (US$21 million) in 2Q 2018.

Net income climbed to COP$56 billion (US$16 million) in 2Q 2019 versus COP$44 billion (US$13 million) in 2Q 2018, the filing shows.

Commenting on the results, Familia general manager Andrés Gómez Salazar cited “solid growth” in 2019 sales based in part on the launch of new products including a novel four-ply “Expert” toilet paper, “AcochaMax” kitchen towels, “Premium Touch” baby diapers and “Buenas Noches” feminine-hygiene napkins.

Grupo Familia markets its products in 20 Latin American/Caribbean countries and has its principal factories in Medellin and Rionegro, Antioquia; two other plants in Colombia; two more plants in Ecuador and single factories in Argentina and the Domincan Republic.


Medellin’s city-owned “Plaza Mayor” convention center reported August 21 that its first-half (1H) 2019 revenues soared 43% year-on-year, to COP$13 billion (US$3.8 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to COP$3.7 billion (US$1.09 million), compared to an EBITDA net loss of COP$3 billion (US$884,000) in 2015, according to Plaza Mayor.

Expenses likewise were cut by 28% below budget this year, to COP$4.45 billion (US$1.3 million), “responding to a plan of austerity and prioritization raised to guarantee the sustainability” of Plaza Mayor, according to the organization.

As a result, net income came-in at a positive COP$1.2 billion (US$354,000) for 1H 2019, compared to a 1H 2018 net loss of COP$1.5 billion (US$442,000), according to the organization.

“Thanks to articulated work with allies, customers and suppliers, Plaza Mayor continues to consolidate itself as a responsible, solid and sustainable company,” according to the organization.

On a related front, BRC Investor Services S.A. securities qualification company recently issued a “BBB +” rating with a positive outlook for Plaza Mayor, due to “the best financial performance and the highest profitability in recent years, as well as strengthening of our market position, which reflects the increase in occupancy rates in our facilities,” according to Plaza Mayor.

Earlier this year, the Comptroller General of Medellín issued a favorable fiscal and financial evaluation report on Plaza Mayor for full-year 2018.

The Comptroller’s evaluation “highlighted aspects such as management control with 99.9% compliance, including timely and quality delivery [of financial reports], regulatory compliance in accounting, budgetary matters, tax regulations and effective compliance with the actions of the improvement plan for previous audits,” according to Plaza Mayor.

So far this year, Plaza Mayor has hosted several major events including the 49th General Assembly of the Organization of American States, the WCS World Cities Summit, Colombiatex and the Latin America Label Summit.

More recently, Plaza Mayor hosted Colombiamoda and the 75th ANDI Assembly (Colombia’s biggest business-industrial trade association), and is now preparing to receive more events including the Hass World Avocado Congress, the Fourth International Conference of UNESCO Learning Cities and the Summit Orange Economy conference, according to the organization.


A new report from Medellin-based think-tank Proantioquia shows that the Medellin metro area and the surrounding Antioquia department must redouble efforts to boost industrial specialization, public education, public health and transport infrastructure in order to meet the challenges of the coming decade.

The report (see: https://www.proantioquia.org.co/wp-content/uploads/2019/07/desafios-y-oportunidades-competitividad.pdf) identifies and examines problems and opportunities in several crucial areas: industrial specialization, people-skills development, environmental protection, economic advancement, specialized education, infrastructure development, public health funding, public security and the “peace process” with guerilla/criminal groups.

As for industrial specialization, the report cites a study by Colombia’s national statistical agency (DANE) indicating that Antioquia had a specialization index rating better than the national average, at 1.07.

But in a separate, related study by Colombia’s national economic planning department (DNP), Antioquia came in eighth place over-all in industrial specialization in 2018 -- better than the 10th place showing in 2017, but still below the rankings of Bolívar, Santander, Cauca, Valle del Cauca, Atlantico, Boyaca, and Caldas (see chart, above).

DANE statistics show that 16% of Antioquia’s gross domestic product (“PIB” in Spanish initials) comes from industry – far above the 12% of PIB that industry contributes to Colombia’s economy nationally, the report notes.

Even so, Antioquia lags far behind the 42.7% PIB contributed by industry in China or the 23.4% PIB from industry in Brazil, the report notes.

However, greater promotion of technological innovation could help boost Antioquia’s industrial PIB, the report concludes.

As an example, Medellin’s “Ruta N” technology center could help lead the charge by promoting and sponsoring more high-tech forums such as TEDx Medellin, “Charlas N,” the Start-up Forum and Fair, Innovation Land and others, according to the Proantioquia report.

The Antioquia departmental government and local Chambers of Commerce could help subsidize and organize more such events beyond just Medellin, the report adds.

As for science, technology and innovation (STI) development, the city of Medellin ought to dedicate at least 7% of its annual profits received from public utility EPM for STI partly at Ruta N, according to the report.

Such funds also could go for student scholarships in public schools and local/international university studies, with a special educational focus related to Medellin and Antioquia’s “clusters” of strategic industries including those tied to “global value chains,” according to the report.

Medellin's strategic clusters today include sustainable energy, fashion/textiles, advanced manufacturing, business tourism, digital businesses, health/medical business and sustainable habitats. Beyond Medellin, Antioquian strategic clusters already include coffee, cacao and dairy products, the report notes.

Infrastucture Deficit: Build More Highways

Recent studies by DANE and Colombia’s private-sector Competitiveness Council show just how far behind Antioquia still remains in building crucial transport networks in and through its mountainous terrain for connection to Atlantic and Pacific ports.

As a result, Antioquia ranks 19th among Colombia’s 26 departments in kilometers of primary highway per 100,000 inhabitants, and 14th in secondary highways per 100,000 inhabitants, the report shows.

A related study by Colombia’s national business trade group ANDI (Association Nacional de Empresarios) shows that Colombia’s industries in interior cities including Medellin and Bogota suffer by paying two-to-four-times as much as neighboring Latin American countries to move standard 40-feet-long containers to and from ocean ports.

What’s more, Antioquia ranks a poor 19th among all Colombian departments in average transport costs to-and-from major ports, or 21% higher cost than the national average, the study shows. Antioquia shipping costs recently averaged about US$34 per ton, or US$1,484 per container, versus just US$13.87 per ton in Boyaca, the report shows.

However, the now-under-construction “fourth generation” (4G) highways including Pacifico 1 & 2, Mar 1 & 2, and “Regional Norte” in Antioquia would dramatically reduce logistical costs, the study notes.

Public Health Cost Problem: Savia Salud

Meanwhile, Antioquia faces another huge cost problem: Savia Salud, Colombia’s single-biggest “mixed” public-private health network, which covers most of the poorest populations.

Savia Salud arose from the bankruptcy and collapse of several other subsidized “EPS” networks, which roughly resemble the “HMO” and “PPO” networks in the USA.

As the report notes, far too many people pay little or nothing for ever-more-complex, ever-more-expensive health services in Antioquia.

Colombia’s national government provides billions of dollars of subsidies for the “subsidized” (poorest) patients and the uninsured, while workers and employers help offset some of these costs in the parallel “contributory” EPS system, the report notes. The governments of Medellin and Antioquia pitch-in with yet more subsidies, while the employer-funded Comfama organization attempts to make-up the rest. But between the three organizations, the subsidies still aren’t enough.

Some sort of “capitalization” scheme (such as a partial sale of stock in Savia Salud to some private health-care company) potentially could ease the fiscal crisis, the report adds. Heftier subsidies from the national government also would help. But Colombia’s national government is already running deeply in the red, making massive increases in subsidies highly unlikely.

On the other hand, pioneering efficiency standards as employed by Sura -- Colombia’s leading private-sector EPS -- probably could help cut some of the deficit, according to the report.

Savia Salud has more than 2.2 million people in its network in Antioquia, of which 1.56 million are the poorest “subsidized” patients. Too many of these poorer people have chronic illnesses and demand the costliest medicines and costliest procedures, which they can’t afford in the private health networks. In addition, many poorer patients in rural parts of Antioquia (and elsewhere) that lack nearby, high-tech hospitals travel to Medellin where they contribute to chaotic, overcrowded conditions in local public hospitals, the report notes.

During the year 2017, Savia Salud ran-up a COP$175 billion (US$52 million) debt and had an accumulated negative net worth of COP$453 billion (US$134 million), the report noted.

What’s more, the mainly public Savia Salud “mixed” EPS “runs the high risk of politicization and burocratization given that its partners [including public hospitals] have certain [payment] expectations and [treatment] mandates,” the report notes.

“This is what in part is the experience today of Savia Salud, where there’s no co-responsibility” between the EPS network and health-service providers to rationalize care. “The model of the EPS has been distorted by an excess of political influence,” the report adds.

Education, Labor, Broadband Upgrading

On other key fronts, Colombia needs to invest much more in technical and technological education --  if the country ever hopes to compete better with more-advanced nations, the report notes.

Partly because of a history of relatively lower-quality public education -- which often doesn't prepare people sufficiently for today's higher-tech jobs -- about 45% of Colombia’s work force is in the “informal” sector rather than working for modernized companies and corporations, the report notes.

According to a recent report from Colombia’s Private Council on Competitiveness, Colombia needs to make several labor reforms, including:

1. Reduce the costs of certain mandatory, non-wage benefits.
2. Modernize labor codes to enable greater work-standards flexibilities.
3. Reduce the costs of hiring new workers.
4. Broaden the tax base to include more salaried employees, hence making possible more-competitive corporate tax rates.
5. Update the social-security systems for health and pensions.
6. Create incentives for informal businesses to convert to formal, tax-paying businesses.

As for public education programs, Antioquia is lagging behind many of its Colombian departmental neighbors, especially in the crucial “STEM” rankings for competence in science, technology, engineering and mathematics, the report notes.

Meanwhile, just over one-third (34.5%) of Antioquia’s students have access to higher education, according to the report. That puts Antioquia below Risaralda (41% access), Norte de Santander (40%), Boyaca (40%), Quindio (39%) and Atlantico (39%), according to the report.

At the other end of the scale, nations that are members of the Organization for Economic Cooperation and Development (OECD) on average ensure that 73% of students have access to higher education, while Latin America in general has 48% access coverage, according to the report.

For Antioquia to hit the Latin American average, it ought to be offering higher-education coverage to 263,000 students between 17 and 21. But Antioquia was offering such coverage to just over 199,000 students as of 2017, the report shows.

Future development of proposed “digital universities”  would enable more students in rural areas to access university education -- and that would help cut Antioquia’s higher-ed coverage gap, the report notes.

Expanding broadband internet access also would boost educational prospects for students throughout the Antioquia department, the report notes.

Current Antioquia broadband penetration is 16.6% of the department’s population, second ranked in all Colombia -- and way ahead of the 10% penetration average in all of Latin America, according to the report.

However, more-advanced nations have 35% broadband penetration, while Uruguay, Argentina, Chile and Puerto Rico have broadband penetration rates between 17% and 27%, according to the report.
For Antioquia to reach Uruguay’s broadband penetration, another 780,000 citizens would need connections, while 1.27 million would need to be added to reach advanced-nation levels, according to the report.


Medellin-based electric power giant EPM announced August 15 that local leaders from communities around Puerto Valdivia, Antioquia are now participating in a broad government/citizen/EPM expert panel examining possible stability issues with the main rock massif adjacent to the giant Hidroituango hydroelectric dam in Antioquia.

The decision to include the “MEDAV” (Mesa de Dialogos y Acuerdos-Afectados por Hidroituango, Valdivia) leadership group came following an August 10 letter from MEDAV to a Colombian court judge charged with overseeing the multiparty panel now studying the Hidroituango stability issue.

In its letter, the MEDAV group pointed out to the judge that the left-wing political organization “Rios Vivos” – a current member of the multi-party study panel -- fails to represent the affected Valdivia community and “hasn’t made any positive contribution to solving the problems generated” by the May 2018 collapse of a Hidroituango diversion tunnel.

That tunnel collapse last year triggered a flood that temporarily forced evacuation of many homes in Valdivia downstream of the dam.

“Rios Vivos” has fought the Hidroituango hydroelectric project since its inception -- and publicly calls for the dam’s destruction now, no matter whether it would operate safely, and no matter that such a destruction would cost Antioquia untold billions of dollars in future public revenue via the production of zero-emissions, clean electricity for all Colombian citizens.

Instead, Rios Vivos “has dedicated itself to creating panic and delaying the process of bringing about positive solutions for our community,” according to MEDAV.

Since the Hidroituango dam has now been completed, and since the Cauca River is now safely flowing over the dam’s engineered spillway, Valdivia residents are gradually returning to homes previously evacuated.

“Persons and families that suffered from the [sudden, temporary flooding that resulted from the diversion tunnel collapse in May 2018] don’t consider themselves ‘victims’ of Hidroituango, but rather ‘temporary casualties’ affected by the [temporary flooding] -- and we value the efforts by EPM to repair all the damages caused,” according to the MEDAV letter.

“Contrary to what ‘Rios Vivos’ claims, the communities around Puerto Valdivia have built relations of trust with EPM, because this company has kept us informed about the measures they have taken to repair the damages and to minimize the risks of the project. In addition, EPM has complied with the commitments they have assumed to help those affected,” the letter concludes.

In an August 15 press bulletin, EPM added that the technical panel has now met six times, with a seventh meeting scheduled August 28 and a site visit scheduled for September 2-3.

The panel eventually aims to produce a technical study analyzing the stability of the rock massif adjacent to the dam -- in order to decide whether the Hidroituango project should continue to move forward.

The US$5 billion Hidroituango project is scheduled to start producing power in late 2021, then reach its full 2.4-gigawatts capacity in 2024 -- providing 17% of the entire Colombian electric power output.


Medellin-based socially responsible gold miner Mineros SA announced that its second quarter (2Q) 2019 net income fell 41% year-on-year, to COP$11 billion (US$3.2 million).

“The decrease in net income is mainly explained by an increase in financial expenses -- close to COP$6.6 billion (US$1.9 million), derived from the acquisition of Gualcamayo [mining in Argentina], as well as [currency] exchange [costs] on the order of COP$3.7 billion [US$1.07 million) and higher exploration expenses” for proposed mining projects in Argentina and Chile, according to Mineros.

On the other hand, earnings before interest, taxes, depreciation and amortization (EBITDA) rose 47% year-on-year, to COP$94 billion (US$27 million). EBITDA margin for the latest quarter rose slightly, to 31.5%, compared to 31.1% in 2Q 2018, according to Mineros.

Revenues also rose 45% year-on-year, to COP$298 billion (US$$86.7 million), “explained by a 30% increase in production due mainly to the new ounces from our [recently acquired] operations in Argentina, at an 11.8% higher sale price of gold” as measured in Colombian pesos, according to the company.

Operating costs also rose 55% year-on-year, hitting COP$235 billion (US$68 million), “due to the operating costs (about COP$75 billion/US$22 million) in Argentina that did not exist in the prior year, as well as greater purchases of mining material in Nicaragua [at COP$9.3 billion/US$2.7 million],” according to Mineros.

Gross profit for 2Q 2019 grew 17%, reaching COP$63 billion (US$18 million), with a margin of 21.2%, versus COP$54 billion (US$15.7 million) with a margin of 26.3% in 2Q 2018.

Gold production rose 30% year-on-year, of which Colombia accounted for 15,172 ounces, while Nicaragua contributed 31,610 ounces and Argentina contributed 23,935 ounces.

Full-year 2019 gold production is now estimated in the range of 280,000 to 300,000 ounces of gold equivalent, with “expectations that gold prices continue with high volatility and with an upward tendency,” according to the company.

Colombia Permit Update

Regulatory permitting delays had been holding-up expansion of Mineros' environmentally responsible alluvial mining in Antioquia, although “we have made some progress,” according to Mineros.

The company recently won permit approval from the Forest Directorate of the Ministry of Environment, following an environmental study on possible impacts on epiphytic species. The company also eventually convinced Corantioquia to lift a prior ban on riverbank mining.

On another front, Mineros recently completed a required impact study for Colombia’s national environmental licensing agency (ANLA) for some proposed logging near a mining site. Then, in an August 16 filing with Colombia's Superfinanciera corporate oversight agency, Mineros announced that it has finally won crucial ANLA approvals. 

"Mineros S.A. informs the market that via 'Resolución No. 01612' of August 15, 2019, ANLA resolved our request to modify the environmental management plan for our alluvial operation, unifying some of the resource-use permits," according to the company announcement. 

"Through this modification it is [now] possible to continue our alluvial operation, which had been restricted because of delays in obtaining permits," the company added. 


Medellin-based multinational Grupo Orbis – which includes paint manufacturing giant Pintuco – on August 15 reported COP$6 billion (US$1.7 million) net income for second quarter (2Q) 2019, a big reversal from a COP$17 billion (US$4.9 million) net loss in 2Q 2018.

Earnings before interest, taxes, depreciation and amortization (EBITDA) skyrocketed by 490% year-on-year, to COP$43.6 billion (US$12.6 million), according to the company.

“This good result was due to the dynamics of its businesses in Colombia and its subsidiaries abroad,” according to Orbis.

“In the paints business, [profits growth were from] significant growth of Pintuco stores and high performance coatings in Colombia, the recovery of profitability in Central America, and the optimization of raw material costs and operational expenses,” according to the company.

“In the [Andercol] chemical business, the good results of Brazil and the profitability of the companies in Colombia [can be credited to] finishing the process of stabilization of the new production plants.

“In O-tek [water-treatment technologies subsidiary], results are tied to the good performance of our subsidiary in Argentina and in the [favorable] positioning of the cleaning business, with 7.3% growth in its brands,” according to Orbis.

For first half (1H) 2019, corporate-wide revenues grew 4.11% year-on-year, to COP$680 billion (US$197.6 million), while gross profit rose 12%.

“These results are due to various dynamics within our businesses, among which the following stand out: a 10% increase in sales of the paints business, where the decorative painting and high performance coatings businesses stand out; the completion of the transfer of Colombian plants for chemical business to Cartagena; and better results of the group’s subsidiaries abroad, especially in Brazil, Central America and Argentina,” according to the company.


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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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