Venezuela struggles with sporadic food shortages

Wednesday, January 16, 2013

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CARACAS, Venezuela - Mireya Bustamante spent most of the day trying in vain to find flour to bake a birthday cake for her four-year-old son.

Like most Venezuelans, the single, 33-year-old office worker has periodically struggled with such food shortages for years, and, like many in the country, thinks they're getting worse. She blames price and currency controls imposed by the government, though authorities contend unscrupulous business owners are at fault.

"An odyssey that never seems to end" was how Bustamante described the everyday challenge of finding basic foodstuffs.

"What good are the controls if it becomes so difficult to find basic products?" asked the mother of three. "It's the government's fault, not the owners of neighborhood grocery stores."

Venezuelans have long had to shop around to find scarce foods, and lately consumers have had particular trouble finding staples such as chicken, cooking oil, sugar and coffee, as well as toilet paper and some medicines. The shortages are a potential political vulnerability for the government while President Hugo Chavez remains in a Cuban hospital, unheard from more than a month after his fourth cancer-related operation.

Such economic questions about his socialist model are adding to the political uncertainty sparked by Chavez's illness and long absence. However, there have been no signs so far that the political crisis is aggravating the economic one.

Chavez's government has sold cheap, subsidized staples at state-run markets for years to reinforce support among the poor. It says price controls, established in 2003, are essential to protect consumers by countering inflation while government-established exchange rates for foreign currencies are needed to prevent capital flight. Those currencies, chiefly the U.S. dollar, enter the country as payment for Venezuelan oil.

But many economists counter that government mismanagement of the economy through the price and currency controls are in fact making people's lives harder by making it more difficult to find goods. Critics also argue that official accusations of hoarding and price speculation aim to deflect blame for failed policies.

On top of that, many analysts believe heavy government spending on social programs and giveaways ahead of Chavez's October 7 re-election badly depleted the nation's treasury, which further shrank the supply of dollars.

"Since the presidential election in October the government has seriously restricted the amount of dollars it is assigning to the private sector. This has caused the parallel dollar to soar and is leading to shortages," said David Smilde, a University of Georgia sociologist and analyst for the US think tank the Washington Office on Latin America.

The Chavez government has long been at loggerheads with private business leaders over state-set price controls and on January 7 government inspectors began raiding warehouses. The government said Monday that it had recovered 3,088 metric tons of allegedly hoarded food this month.

Over the weekend, National Guard troops entered one market in downtown Caracas and confiscated 20 tons of beef, 15 tons of corn and four tons of garlic that allegedly violated price controls.

A central part of the problem has been Venezuela's growing dependence on food imports, which have risen in the nation with the world's largest oil reserves. Domestic production of some food products has declined while inflation has soared, reaching 20 per cent last year, the highest in Latin America.

Starting in 2007, Chavez also stepped up nationalizations of industries and expropriations of private property, although it's unclear how those moves have affected food production.

Jorge Roig, who represents Venezuela's largest business chamber, called on the government Monday to free up more dollars, which could be used to buy more imported goods. He said that on average Venezuela is importing between 65 percent and 70 per cent of its food each month.

Roig said business leaders in October had warned the state agency responsible for trading US dollars to businesses at the official exchange rate that shortages of food and other products would occur during the first quarter of 2013 if the government didn't release more hard currency.

"The market is undersupplied and it's showing on the shelves," he said.

A monthly scarcity index compiled by Venezuela's Central Bank, relying on spot checks in markets across the nation, reached its highest in four years last month. The index remains below a high hit in 2007, when widespread food shortages were considered a key factor in Chavez's defeat in a referendum on constitutional changes.

Pollster Luis Vicente Leon said the current shortages could again reach levels seen in 2007.

The business chamber said on Tuesday it hopes to work with the government to tackle the problem of food shortages.

"Fedecamaras reiterates its willingness to take joint action with the government, business and labor sector that will allow a reversal of the growing deterioration of production, infrastructure and supplies," the chamber said in a statement.

Recently, several shops and supermarkets in downtown Caracas suffered from a lack of chicken, milk, cooking oil, beef, sugar and coffee. Also scarce was cornmeal, the main ingredient for the country's cherished "arepas," which are corn cakes stuffed with meat, chicken, cheese or other fillings.

As a result, consumers must often hop from market to market in different areas of the city to fill their grocery lists.

Beatriz Romero, a 44-year-old housewife, emerged exasperated from a small grocery store in bustling downtown Caracas holding plastic bags full of canned goods and vegetables.

"I didn't find everything that I needed," said Romero, who said she was looking for rice, cornmeal and sugar. "I'll have to go look for the other products somewhere else."




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