Medellin – the epicenter of Colombia’s mainly “green” electric power industry – this month hosted the 6th biannual FISE Electric Power Fair with more than 15,000 visitors, 320 exhibitors, US$200 million in new business deals -- and a growing focus on wind/solar power as well as electric vehicles (EVs).

At the Plaza Mayor convention center here, attendees jammed into 150 technical sessions December 4 through 6 on electric power generation, transmission, distribution, emerging technologies, regulatory and legislative innovations -- and eyed the emerging trend of “self-generation” not only at industrial scale but also at homes, shopping centers and small businesses.

More than 60 companies from 19 foreign countries participated in special “international business network” sessions co-organized by FISE and Colombia business-promotion agency ProColombia. In total, more than 1,000 business negotiation meetings took place at FISE, according to the organizers.

Medellin is the headquarters of most of Colombia’s electricity giants including ISA (the national power transmission operator and energy-trading center), Isagen (power generation), Celsia (power generation and transmission), EPM (the nation’s biggest power company), CIDET (industry research center) and many local and international engineering, technical and supply organizations.

FISE this year also dedicated a portion of trade-show floor space to electric vehicles (cars, motorcycles and bikes), EV charging technologies, solar photovoltaic (PV) technologies, smart-meters and exhibitions touting distributed-energy schemes.

While China, Europe and the USA are taking the global lead in EV sales and recharging networks, Colombia is just starting to see this market take hold, with 3,167 EVs sold through July 2019, according to FISE.

Given Medellin’s air-pollution problems – overwhelmingly caused by gasoline, diesel and natural-gas-fueled cars, buses, trucks and motorcycles – it’s likely that Medellin will continue to be Colombia’s national leader in the move to EVs, according to several expert presentations here.

For example: Medellin this year began deploying more than 70 “Metroplus” zero-emissions electric transit buses, which complement the city’s vast, electric-powered “Metro” railway system, a growing network of all-electric “Metrocable” aerial trams, and electric-powered road trams, which combined carry 1.5 million passengers daily.

In this respect alone, Medellin is light-years ahead of all other Colombian cities including Bogota, Cali, Cartagena, Barranquilla, Armenia, Manizales and elsewhere.

What’s more, EPM just inked a deal with U.S.-based global wind/solar-power developer Invenergy to build and operate at least 400 megawatts (MW) of wind and solar power plants in Colombia by 2025 (see Medellin Herald November 27, 2019), with investments likely hitting US$500 million to US$600 million.

EPM is Colombia’s first (and only) pioneer in wind power generation through its 19.5-MW “Jepírachi” wind farm –built in 2004 -- in the La Guajira desert region, which has some of the world’s strongest and most-reliable wind conditions (averaging 9 meters per second, double the national average), experts noted here.

La Guajira also has Colombia’s highest solar insolation average -- at six kilowatts per square meter, 66% higher than the national average, and much higher than the world average.

Which explains why La Guajira is the target of big new wind/solar power projects by major developers-- including EPM and Celsia -- as Colombia’s Energy Ministry vice-minister Diego Mesa outlined in a keynote presentation here.

Special tax exemptions -- and Colombia’s new regulatory mandate requiring energy generators/distributors to incorporate 8% to 10% of electric power from “unconventional” renewable power sources (mainly wind and solar) – explains why these “green” sources will rise to 1.5-gigawatts capacity by 2022, up from only 50 MW today, Mesa showed.

That represents a COP$7.5 trillion (US$2.2 billion) investment in new wind/solar capacity here in Colombia, he added.

While Colombia has a relatively robust 97% of homes, businesses and industries connected to electric power, some remote areas still lack electricity, Mesa noted. Which is why the current national government aims to work with private companies to hook-up power for 500,000 more people by 2022. That’s one-quarter of the 2 million rural, remote Colombians still lacking power.

Meanwhile, the expected 2022 entry-into-operations of EPM’s 2.4-gigawatt, US$5 billion “Hidroituango” hydroelectric plant will help EPM meet its 2025 deadline for “carbon neutrality,” as EPM markets director Jose Enrique Salazar pointed out in a separate presentation here.

Nationally, Colombia aims to become “carbon neutral” in all of its industrial, commercial and personal activities by 2050 – with the mainly hydroelectric power industry running way ahead of all other sectors, and soon to be even "greener" with the upcoming wind/solar power plants.

By 2030, Colombia aims to have 3.3 gigawatts of wind-power installed, along with 2.57 GW of hydropower, 705 MW of solar, 650 MW of natural-gas-fired power, 187 MW of oil-based power, 889 MW of liquefied natural gas (LNG) fired power, 270 MW of LP-gas power and 250-MW of “small-scale” power, Salazar explained -- adding that LNG-fired power will gradually replace what remains of the relatively "dirty" oil-fired power.

While carbon dioxide (CO2) “global warming” emissions aren’t yet taxed globally, Colombia already has a COP$16,422 (US$5) per-ton CO2 tax -- and government officials are studying the possibility of creating a local emissions trading scheme (ETS), he added.

The new wind-power farms planned by EPM, Celsia and others will generate renewable energy credits (RECs) – tradable in world markets -- as well as emissions-reduction certificates valuable for offsetting other, less-green operations in Colombia, he showed. EPM was the first company in Colombia to sell RECs globally, he explained.

The worst CO2 emitting sector in Colombia is transport vehicles. So, conversion of more of the car/truck/motorcycle/bus fleet to electric power (tapping “green” electricity generation) would help Colombia more rapidly achieve its “carbon neutrality” goals, Salazar 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.

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.

Medellin-based textile and clothing industry trade group Inexmoda announced July 25 that the just-concluded, 30th annual “Colombiamoda” fashion show here generated sales deals estimated at US$143 million.

While that’s a 15% dip from last year’s Colombiamoda sales estimate, it’s still a positive sign for Colombia’s fashion industry, with Medellin and Antioquia continuing to lead the way.

According to Inexmoda, this year’s show included 11,800 buyers, 12% of which were internationals – mainly from the USA, Ecuador and México. Among the Colombian national buyers, most were from Antioquia, Cundinamarca and Valle del Cauca, according to the trade group. A parallel “Textiles2” show here included another 800 buyers.

In addition to the in-person attendance, another 70,000 people were able to tune-into Colombiamoda 2019 via internet, through a special “Concept Market” and “Colombiamoda Digital” channel.

This year’s edition included 25 fashion runway shows featuring Colombian designers and 206 models from 28 agencies, according to Inexmoda.

In another novelty this year, Inexmoda, Colombia trade promotion agencyProColombia and international package-delivery company FedEx organized a special show targeting international buyers of Colombian fashion designs.

On the education front for the show, Inexmoda and Universidad Pontificia Bolivariana attracted 8,700 in-person attendees and 6,000 internet streaming attendees for several lectures and workshops on issues affecting the fashion and textile industries.

A parallel fall-winter 2019-2020 fashion-trends "outlook forum" included 16 more lectures. In addition, a first-ever “prospectives forum” enabled 900 visitors to experience future design possibilities using artificial intelligence technologies provided by Microsoft.

Besides generating new business deals for fashion designers and clothing manufacturers, Colombiamoda 2019 generated an extra US$12 million in income for local hotels, restaurants and vendors, according to Medellin’s Secretary of Industry and Tourism.