Caracas Chronicles

Juan Cristobal says: – After last December’s referendum defeat for Hugo Chávez, Venezuelans reached a consensus, something we don’t typically do. Whether chavista or not, we all agreed that one of the factors that hurt the government the most was the increased scarcity in basic staples such as milk, chicken and beef.

Conscious of this Achilles’ heel, the government took the problem head on. The result is that the last few months have seen scarcity decrease, although sporadic shortages still appear.

One of the first things the government did early in the year was to increase the regulated prices of many basic staples. As most of you know, the Venezuelan government controls the prices of everything from milk to salaries to apartment rents, and it has been gradually announcing price increases on many of these items.

The other thing the government has done is increase the allocation of dollars to import food. According to ODH, a local consultancy, in the first five months of 2008 food imports totaled US$4 billion, a whopping 113% increase on the same period of last year. While a portion of this can be explained by higher international prices for some food staples, most of the increase comes from higher volumes of imports.

According to their estimates, 26% of what Venezuelans spent on food last year was spent on imported food. They expect this percentage to soar to 50% by the end of this year. Needless to say, this leaves Venezuelans much more vulnerable to fluctuations in international food prices, as well as in the price of oil.

So much for “food sovereignty.”

Lest you think the government is veering to the right, it is also tightening its grip on food supply. For example, it has created an extended bureaucratic web seeking to exert more control on the distribution of various food staples across the country, based on their estimates of the amounts Venezuelans should be eating. Apparently, it has begun regulating food distribution with a heavy hand, sometimes limiting truck dispatches if they don’t concur with their estimates of where each staple should go to.

The government has also created a web of retail outlets called PDVAL, managed by PDVSA. These outlets are apparently causing an impact, although it’s hard to tell exactly how much. Yet whatever the effect, it appears as though the growth of PDVAL has little to do with managerial efficiency and a lot to do with the enormous amount of cash the government has.

Case at hand: last year I took a lot of flack for discussing a Maracucha chain of supermarkets called En-ne. I posted a couple of pictures of people waiting in line to buy milk, and our Caraqueño-centric readers found it amusing that Maracuchos had their own chain of stores.

We’ll see how long it lasts – the latest rumour in Maracaibo is that PDVAL is buying En-ne.

Increase imports, regulate distribution, raise prices to please local producers, buy supermarkets and open your own. With a government awash in cash and drunk on power, fearful of losing another election, anything goes. Expect more of the same.