Monday 7 October 2013

Venezuela Update: Food Situation Worse under Maduro than Chavez

Venezuela Update: Food Situation Worse under Maduro than Chávez
On March 11, 2013, shortly after his death on March 5, I posted a blog about how Hugo Chávez had managed to create food shortages in Venezuela during his 14-year rule there. You can read that original blog at This is a short update on the food situation in Venezuela under Nicolás Maduro, who was Chávez’s designated successor and who was elected president in his own right on April 14, 2013.
 I’ve based this update on English-language newspaper reports I’ve been tracking since January 2013. It looks like things are getting a lot worse, not better, under Maduro. I realize it’s possible to argue that I’ve just been reading biased, anti-socialist press, but that argument doesn’t wash.  Neither Chávez nor Maduro understood/understands how markets work: they think that nationalizations and price controls will reduce food prices, but they don’t understand the costs to production and distribution of food of using those mechanisms.  
Nicolas Maduro- Wikipedia Commons
Maduro has been continuing—and exacerbating—all the policies I described in my March 11 blog, such as imposing price controls on more and more food and other items. The twelve-month inflation rate skyrocketed to 35 per cent per year by June 2013, partly as a result of continued devaluation of the bolivar, the Venezuelan currency, but also as a result of food scarcities. Food line-ups are becoming longer and longer as more and more food items become scarce, and Venezuelans have to spend more and more time going from shop to shop looking for goods. Many people who’ve been interviewed by the press complain about severe shortages of basics such as milk that they need to feed their children.
By June 2013 the price of basic commodities had risen by 44.6 per cent in one year: by August the figure was a rise of 60.8 per cent in one year. Rice, coffee, and beef, previously produced inside the country, now arrive from other countries. Maduro spends much of his time making deals with other Latin American countries to import food from them, but this food often rots as ships can’t unload at congested, inefficiently-run ports.
But this provides new opportunities for web entrepreneurs. Someone developed a mobile app to provide information about what goods are available where, so consumers can reduce the time they spend going from store to store looking for food. Some other people developed a website to provide information about the real (black-market), as opposed to the official exchange rate of the bolivar to the US dollar: Maduro responded by ordering their arrest.
When not blaming the shortages on an imperialist, CIA-led conspiracy, Maduro explains them away by focusing on “over-consumption” by Venezuelans, who have more purchasing power than in the years before the latest oil boom. He also blames shortages on a deliberate campaign of sabotage by food producers and distributors, ordering government agents to raid private companies’ warehouses for allegedly “hoarded” food. The private producers respond that much of the hoarded food is simply what is needed for production of finished products: for example, sugar for soft drinks. The largest food company in Venezuela, Empresas Polar, can’t import enough inputs for processed food such as the pre-cooked flour for arepas, Venezuela’s staple food because it can’t get government permission to buy dollars to finance its imports. Meantime, smugglers sell price-controlled food over the border in Colombia, thus exacerbating the food shortage.
Ironically, just as these food shortages have been worsening, in June 2013Maduro accepted an award from the FAO for Venezuela’s success in reducing malnutrition. While this success was real, as I discussed in my March 11 blog, it was due in large part to Venezuela’s high oil revenues and to general and unsustainable mismanagement of the economy. Other Latin American countries have achieved similar success to Venezuela’s in reducing malnutrition without huge oil revenues and without undermining the market economy.
If mothers in Venezuela cannot find milk for their children, then malnutrition might rise again in the not-so-distant future. Indeed, by early August 2013 forecasters were predicting a long-term decline in food consumption by 7.5 per cent by 2017. Maduro’s insistent continuation of Chávez’s economic policies does not bode well for Venezuelans’ future food security.

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