Chávez Destroying Venezuela’s Food Industry

Government monopolies cause food shortages and shopping frenzies in Venezuela.

The economic situation in Venezuela hasn’t much improved since Hugo Chávez imposed currency and price controls last January. Food shortages and shopping frenzies persist while government monopolies and restraints threaten to choke private enterprise.

The president’s policy so far has been a familiar one: blame the capitalists. In January he expropriated six Exito stores owned by the French Groupe Casino. One month later, he seized Cada, another Casino chain, with 35 supermarkets and eight distribution centers in Venezuela.

The food scarce is imperiling Chávez’ much cherished food-for-the-poor program. In the past years, he has not only expropriated stores but food processors and over six million acres of farm land and ranches, all the while propagating to his people that government is better equipped to feed the Venezuelan masses than the market can ever be. Yet production has suffered. Between 1999 and 2008, per capita, sugar cane dropped by 8 percent; fruit by 25 percent and beef production by so much as 38 percent.

While oil prices skyrocketed, Chávez was able to compensate for the decline in production rates with imports from neighboring Argentina and Brazil. During the aforementioned period, food imports rose from amounting to $1.3 billion to $7.5 billion; more than two-thirds of what Venezuelans consume.

When the price of oil went on the decline, the National Assembly reacted by enacting legislation that allows the president to expropriate virtually any enterprise that may be deemed to be of national interest. Exito’s alleged misdeed? Raising food prices following January’s currency devaluation. Then, in March, the government did allow stores to boost prices, by so much as 35 percent. Exito, unfortunately, couldn’t hold out that long.

Chávez announced that he intends to transform Exito’s outlets into “socialist megastores” that sell, besides food, appliances and clothing. “The measure is one further step in the Venezuelan state’s policy of transforming capitalism into socialism,” he said on one of his weekly televised addresses.

Few businessowners dare to speak out against the regime, fretful that their enterprise will fall victim to state expropriation next. Meanwhile, they have to compete with government-run groceries which sell basic goods at 40 percent lower prices and cope with intimidation and oversight. So-called “community councils,” which are neighborhood watch groups, can order “inspections” at any time. Tax authorities, the consumer protection agency, workplace safety inspectors, even the National Guard, regularly harass shopkeepers and have the power to shut them down for even the slightest offense.

Unsurprisingly, Chávez’ approval rating has plummeted throughout it all, down from 70 percent three years ago to barely 50 percent today. Although he doesn’t face reelection until 2012, Chávez does intend to maintain his party’s majority in parliament which is up for election next September. A majority of the people oppose the takeovers now, realizing that they aren’t doing any good. But, for the time being, the socialist dream marches on in Venezuela.

Comments

  1. Isn’t the entrepreneurial spirit amazing though? It still manages to survive under ridiculous restrictions and regulations. Ironically it is because of this spirit that his country is surviving, yet he is trying to stifle it anyway.

  2. Of course. It’s sad at the same time. While those entrepreneurs persevere, they’re actually sustaining Chavez’ bizarre rule. Imagine what would happen if all businessmen were to say, “the hell with it”. The country would collapse within weeks.