Combatting Food Shortages in Venezuela

Luis Albonoz, who owns a small fruit and vegetable store in the same
city, says his store hasn’t been directly affected by the food
shortages that have occurred throughout Venezuela, but told GLW
that “it affects us as consumers. Food is necessary and the prices we
have to pay are too high. We have small kids so we have to pay the
price.”

Asked who he thought was responsible for the problem he replied:
“It’s a problem of smuggling. Some people hoard large quantities and
then they sell them at much higher prices.”

“We lack milk, rice, spaghetti, sugar, eggs, chlorine and toilet
paper”, said Maximiliano Fernandez, as he looked around his packaged
food and liquor store. “Every three days we buy milk but there is no
powdered milk.”

The growing problem of food shortages in Venezuela has become a
real point of discussion. Go to any supermarket or small shop and
people are talking about it, complaining that they can’t buy what they
need and sharing anecdotes about how expensive products have become.

Rising discontent over food shortages has become a major challenge
for the government of Venezuela’s socialist President Hugo Chavez. More
than a few analysts have pointed to the issue as one of the factors
behind the defeat of Chavez’s proposed constitutional reforms — that
aimed to strengthen popular power and help open the transition to
socialism — in the December 2 referendum.

It has also exposed a number of problems that the Bolivarian
revolution — as the process of change led by Chavez that aims to
overcome underdevelopment and poverty is known — has been unable to
overcome. Solutions to such problems are crucial to the survival of the
process.


What is responsible?

It is undeniable that the campaign by the right-wing private media
has been a crucial factor in fuelling discontent, demonstrating the
ongoing influence the old ruling elites that own the private media
continue to have. This campaign has helped make the shortages worse as
spooked customers rush to stock up.

This campaign gathered momentum in the lead up to the referendum.
The percentage of people who felt that shortages were a problem
increased from 64% in the third quarter of 2007 to 78% in the last.

At the same time consumption has been dramatically increasing in
Venezuela, fuelled by a significant economic boom and the Chavez
government’s social policies that have greatly increased the spending
capacity of the poorest.

A recent report of the Venezuelan American Chamber of Commerce and
Industry revealed that between 2004 and 2006, the real income of the
poorest 58% of the population increased by 130% after allowing for
inflation. This figure does not take into consideration other benefits
that have come about as a result of the government’s social missions
that provide free education and health care, nor the impact of the
Mercals — state subsidised supermarkets that sell products at an
average 39% below prices found elsewhere.

As a result, consumption has more than doubled from US$24 billion
in 2004 to $52 billion in 2007. The increased consumption, with
production falling well short of demand, partly explains the shortages.

Global factors

During his January 20 Alo Presidente TV show, Chavez
explained how production shortages are not just a Venezuelan issue.
Using milk as an example, he pointed out how global consumption of milk
had risen by 14.3% between 2002 and 2007, yet the number of cows for
milk production increased by just 1%.

Quoting from the article “Forget oil, the new global crisis is food” in the January 7 Financial Post,
he said: “The impact of tighter food supply is already evident in raw
food prices, which have risen 22% in the past year … wheat prices alone
have risen 92%”.

Chavez said the causes included the effects of global warming,
leading to increased droughts, as well as the fall of the US dollar and
speculation on the market.

Another factor “is Bush’s crazy plan to use food to make fuel”,
referring to the US plan to use subsidized corn production in order not
to feed people, but rather cars run on ethanol.

This plan has led to the global price of corn increasing by 44%
over the past 15 months, with “US corn exports in danger of seizing up
in about three years if the country continues to subsidize ethanol
production”, according to the Post.

“And which are the countries most affected by this crisis?” asked
Chavez. “Countries like ours, that as a result of a whole century of
abandonment” of agricultural production, with the economy geared around
exporting oil, “therefore do not have our production guaranteed”.

While these factors are real, there is more to the story. For
ordinary consumers confronting rising prices and shortages of basic
goods, opinions vary as to who is responsible.

As the referendum approached, the media campaign was clearly
biting, with polls indicating that people were increasingly directing
their discontent towards the government, rather than the capitalist
owners of supermarkets or agribusiness.

A survey published in October and conducted by Datanalisis, one of
the more reliable polling agencies in Venezuela, revealed that 88.4%
believed that the solution lies in the government and private companies
working together, with 88.1% saying that private companies should be
producing more.

Asked if they believed that government price controls — introduced
in 2003 to deal with the economic devastation caused by a bosses
lock-out that aimed to overthrow the Chavez government — were causing
shortages, 69.3% said yes.

In response, the government has removed price controls on all but
20 products. Previously some 400 products were subject to controls in
an attempt to assist consumers.

The removal of the controls has been welcomed by capitalists and
private media, who have blamed them from the beginning for causing the
shortages. The argument presented is that since producers were being
forced to sell their products at lower than market prices, production
would drop automatically as there was no incentive to continue it at
either existing levels or increase it.

This argument is true in a capitalist economy, where the sole
purpose of production is to generate the greatest possible profit for
the private owners of the means of production. If a capitalist can
produce something else that makes them more money they will, regardless
of the social consequences.

Capitalist sabotage

However, the process of change in Venezuela has increasingly aimed
at moving away from organising the economy along those lines. The
Chavez government has increasingly been implementing policies, such as
price controls, that go against the interest of the capitalists in
order to gear the economy towards the needs of the majority — a shift
Chavez has described as an attempt to construct a “socialism of the
21st Century”.

In response, the capitalists have attempted to protect their
interests by trying to overthrow Chavez. It is no surprise that
Venezuela’s chamber of commerce, Fedecamaras, was a leading force in
the failed military coup against Chavez in April 2002 and the bosses
lock-out that started in December that year.

The capitalists have fuelled the food shortages by holding goods
back from the legal market where price controls lower profit margins,
then selling them illegally at exorbitant prices on the black market.
Another way around the price controls has been to smuggle food out of
Venezuela to be sold in neighbouring Colombia.

In this way, as well as maximising profits, capitalists also hope to destablise the government.

That this would be an outcome of price controls over an economy
still predominantly capitalist should come as no surprise. Yet it
appeared it did for the government, which was completely unprepared for
such problems.

Even worse, sections of the corrupt state bureaucracy helped exacerbate the problem while attempting to deny it existed.

The government has taken measures attempting to overcome the
problem, including, over the last three years: decreeing the creation
of 21 agribusinesses through the state-owned Venezuelan Agrarian
Corporation; financing 51 Companies of Social Production (EPS), mainly
cooperatives; created several new factories through joint ventures with
Cuba and Iran; and established 6000 free food houses for the neediest.

It also initiated Mission Mercal, which coordinates 14,000
government-subsided stores outlets, while making some moves to buy out
or expropriate companies involved in food production.

However, these measures fall well short of what is needed to
overcome nearly a century of neglect of the countryside, which has left
Venezuela dependent on imports for around 70% of its food.

Mercal accounts for only 22.7% of national consumption. The new
state-run agribusinesses and EPS’s account for only 1.48% of
agricultural produce.

Corruption and bureaucracy

Furthermore, Mercal has become riddled with the corruption that is
crippling the Venezuelan state, with many of its products appearing on
the black market or in Colombia. Often elements of the National Guard,
particularly those stationed on the Colombian border, have been found
to be involved.

Additionally a number of the factories being constructed to help
increase domestic production are well behind schedule, and many already
built are producing well below capacity — suffering from bureaucratic
inefficiency and, in some cases, active sabotage.

While several thousand factories have been shut down by their
capitalist owners, who are refusing to invest and produce, only a
handful have been taken over by workers and reopened under workers’
management.

This is despite the calls made by Chavez for workers to take over
idle factories since 2005. The weak and disorganised state of the
workers’ movement, with low levels of consciousness and organisation,
have combined with the problems of bureaucracy to hamper the
revolution’s ability to respond to such sabotage.

Another factor is the slowness of the land reform process — which
seeks to redistribute idle land owned by the state or large landowners
to campesino
(peasant) cooperatives to stimulate production. The problem is again
that while the revolutionary government has formal control over state
institutions, its programs are being sabotaged by either consciously
counter-revolutionary elements or through bureaucratic ineptitude — in
this case within the National Institute for Land.

Frustration among campesinos has grown as many continue waiting for
promised land and loans. At the same time, large landowners have
increasingly resorted to violence against the campesino movement, with
police and courts either unwilling or unable to bring the perpetrators
to justice


Mobilising people’s power

It is in this context that Chavez made his recent call for an
alliance with the “national bourgeoisie” — Venezuelan capitalists — in
an attempt to stimulate production. He announced a 40% increase in the
price of milk and more incentives to help milk producers.

However, the offer of help came with a warning: those that refuse
to produce, or who sell their produce abroad, will be expropriated.

He called on the people and the military to join the battle against
hoarding and speculation by monitoring stores and factories. Any caught
violating the law are to be shut down and taken over.

Greater policing of the Colombian border has already seen more than 2000 tonnes of contraband food intercepted.

Dealing with the food shortages is essential for the survival of
the government. Elections for governors and mayors will occur later
this year, and with discontent at poor government management growing
and the pro-capitalist opposition revitalised after the referendum
defeat, some Chavistas are openly talking about the possibility of
losing some important positions to the counterrevolution.

Fundamental solutions

Relying on food imports and concessions to the capitalists to deal
with the shortages, while possibly alleviating the crisis in the short
term, cannot be a long-term solution.

Only by shifting control over production and distribution into the
hands of the workers and communities can the issue by decisively
tackled. The working people are not driven by individual profit but the
collective needs of all.

The revolutionary process has already revealed this dynamic — the
actions of working people organised from the grassroots smashed the
December 2002-January 2003 bosses’ lock-out by collective organising
that included taking over important points of production and
distribution.

For this reason, the new milk plants the government is building
will be managed and controlled by communal councils — elected grass
roots bodies of popular power.

The government also announced in January the creation of PDVAL — a
food production and distribution company to administered by the state
oil company — to work parallel with Mercal. The food will be
distributed in conjunction with a private distributor in municipal
markets’ and through PDV petrol stations, which have been mooted to be
handed over to communal councils to administer.

In the impoverished Caracas neighbourhood of Petare, communal
councils have already begun to demand that the local Mercals be placed
under community control. Meanwhile, a section of the National Union of
Workers (UNT) has called for the creation of a united front against
hoarders and food shortages, calling meetings of unions, communal
councils, and campesino and social organisations in the states of
Aragua and Carabobo.