Food for thought
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Perhaps anticipating a break in commercial relations with Colombia that might make a bad situation worse, Venezuela is finally moving to alleviate the food shortages that were a major factor in the electoral defeat in December of President Hugo Chavez’s bid to change the constitution. If he had won, Chavez would have been eligible to run for reelection indefinitely. But polls indicated voters turned on him because of increasing dissatisfaction over issues such as food scarcities.
On Sunday, during his ‘Alo Presidente’ television program, Chavez said he was raising the controlled price of milk to 70 cents a liter from 55 cents, while reducing or eliminating import duties on a range of basic food items. Chavez is shown at left at the reopening of a milk processing plant in Machiques in western Venezuela. The move should stimulate domestic milk production and imports.
Years ago, in an effort to give a break to the poor, Chavez set prices on two dozen basic food and household items, including milk, at a level 35% below the market. But the move damaged domestic agriculture and created an enormous black market fed by producers and farmers who say they cannot make enough selling at the government-set prices. Hopes that thousands of government-funded cooperatives would pick up the production slack did not materialize.
While the output of Venezuelan farmers and ranchers has shrunk, producers in Brazil, Argentina and Colombia are making out well: The Chavez administration buys their products at market rates and then uses its plentiful oil revenue to subsidize their sale at lower prices through the government-run Mercal discount grocery chain. To supply those products, Venezuela has relied heavily on neighboring Colombia, from which it bought $4 billion worth of goods and services last year. But amid deteriorating relations with Colombia, Chavez could face further supply problems -- heightening scarcities and increasing the expense of his subsidies. All of which, perhaps, explains the timing.
-- Chris Kraul in Bogota