Caracas Chronicles

With its open white façade, a modern bunker-like building stands out in Acarigua, an agro-industrial powerhouse in the state of Portuguesa, in western Venezuela. With nothing to envy of a Caracas Cafe, the place is an experience-centered coffeehouse owned by a local brand which produces its coffee in the state. Inside, there’s colorful sofas, long wooden tables, green walls, screens with the brand’s logo, a souvenir store and even a glass staircase full of coffee beans that create a color gradation. The coffeehouse highlights the economic boom that Portuguesa is experiencing. 

While Venezuela’s GDP could grow only a bit over 0% to 3% this year in the best of cases, in Ecoanalítica we expect Portuguesa to experience an interannual growth of around 10%.

Portuguesa’s boom is the result of Venezuela’s new socio-economic reality, following eight years of economic contraction rarely seen in countries outside of war. Over 81% of the country’s population is now under the line of poverty, leading to most families centering their consumption on food. On average, 60% of consumer goods bought by a Venezuelan family are groceries. The percentage rises to more than 90% in poor families. These consumption patterns have boosted the food industry, including primary and secondary production but also the commercialization of these products. In fact, the upsurge of supermarkets and retail in Caracas—as well as of imports, which are pouring into bodegones—is also a result of these dynamics.  

Venezuela has several agricultural heartlands, such as the one in the Andes or the one in the central region eastward of Caracas. But Portuguesa in particular—the country’s breadbasket, source of essential products for the Venezuelan food industry like corn and rice—has some of the highest percentages of farmland among the 23 states: 53% of its land, over 800,000 hectares (another 27% is used for cattle). The state has also benefited from certain economic and political dynamics, since the second half of the 20th century, which transformed it into a fundamental axis of agro-industrial production.

While Venezuela’s GDP could grow only a bit over 0% to 3% this year in the best of cases, in Ecoanalítica we expect Portuguesa to experience an interannual growth of around 10%.

Portuguesa shows an excellent synergy between small farmers and agro-industrial companies, which have lent technical and financial support to the former, by lending money or supporting them with technical personnel, technology, or seeds. These collaborations have boosted crop yields. 

Portuguesa has a private debt market –founded on high-trust networking and interpersonal relations– where local businessmen are giving loans to producers, instead of investing their money in the stock markets or other ventures because yields are higher: an annual 20% or 30% return, and in some cases even more, depending on the type of crop.

While Venezuela’s banking credit is small, it’s an important stimulus for Portuguesa’s agricultural economy. Venezuela’s banking system must have a cartera productiva, a loan portfolio focused on production, so banks are bound to lend credit to the food and agricultural sectors. While these loans are smaller than in the past, these sectors—unlike most of the country—are still benefiting from them.

It might be controversial, but one has to say that a more fluent communication between the state’s authorities and the private sector has benefited Portuguesa’s economy. While it’s not a set of formal public policies, interlocution with amicable officials have facilitated the flow of exports and product distribution and even have allowed business folk to access certain supplies to ensure better prices. Wilmer Castro Soteldo, Minister of Agriculture and Production and a former governor of Portuguesa, has been crucial in enabling more direct communication and cooperation between the business sector and authorities.

Such favorable conditions have allowed for the appearance of all kinds of new companies in Acarigua and the state: not necessarily enchufados, but local entrepreneurs and families who are finding opportunities in a booming sector. These new companies have nonconventional management, and many aren’t even competing in the sector’s big leagues. Thus, the new companies have been hiring consultants and advisors to improve their structures and sustain their growth.

Portuguesa has a private debt market –founded on high-trust networking and interpersonal relations– where local businessmen are giving loans to producers, instead of investing their money in the stock markets or other ventures because yields are higher: an annual 20% or 30% return, and in some cases even more, depending on the type of crop.

Portuguesa’s dynamic economy, and its growing private sector, are strikingly different from the rest of the country. As we’ve seen in our multiple consultancy projects in the state, the economic activity in the state has been defined by a different approach of doing business and facing problems. Portuguesa’s patterns could be eventually replicated in other agricultural sectors, like the Merida valleys or the lush lands south of Lake Maracaibo, which are not experiencing similar economic booms.

This contrast is intensified by Portuguesa’s location, which plays in its favor, as it allows for its products to flow towards Caracas and other cities in the central region. Meanwhile, the distribution of products from Zulia and the Andes faces a series of problems: for example, roads are in poor conditions or interrupted by damaged bridges or blockades generated by landslides or overflowing rivers. Gasoline shortages have also halted transportation, as seen in recent videos from farmers in Mérida and Trujillo throwing away tomatoes, bananas, or carrots they couldn’t transport to cities due to a lack of fuel. Similarly, the cost from extortion from military and political checkpoints, as well as from gangs and guerrillas, is pushing prices. Indeed, these farmlands need effective public policies to tackle their structural problems—and follow Portuguesa’s success.