Chavez Announces Project to Combat Food Shortages in Venezuela

January 21, 2008 (venezuelanalysis.com) — Venezuelan President Hugo Chavez focused on the persistent shortages in the nation's supply of milk and meat products during his Sunday TV and radio show Aló Presidente yesterday. The president inaugurated a "socialist" milk processing plant, as well as an agro-industrial complex with the goal of increasing national production and solving food shortages in the country.

"We have to raise national production of meat and milk," said Chavez during the show. "We are going to transform Venezuela into a true superpower in food production."

The show was aired Sunday from a rural town near the Colombian border in the western state of Zulia where the Chavez government plans to install a "mega-project" for the production of milk and other products. The pilot program is meant as a solution to persistent food shortages that have affected the country since last year.

The president began the show by awarding land titles to local farmers, emphasizing the damage that concentrated land ownership does to national production, and insisting that the government carry forward with land reform policies.

He also announced a new program of low-cost credits to small producers as a way to increase investment in the agricultural sector.

"I have approved an extraordinary amount for the agricultural sector," said Chavez. "We are going to increase short-term credit, with low interest, and we are going to raise food production in Venezuela."

President Chavez also announced the creation of a cattle-producing complex in the region that will provide inputs to a "socialist" milk-processing plant inaugurated nearby.

The milk plant, which Chavez claims to be one of the largest in Latin America with a capacity of 1 million liters of milk per day, was bought by the Venezuelan government from the Italian multinational Parmalat for BsF. 800 million (US$ 372 million) after the company abandoned it.

Chavez said the plant is now operating, but producing only 60 thousand liters per day, which is 6 percent of its capacity. The Venezuelan government hopes the plant will be producing 400 thousand liters per day by next month, and 800 thousands liters per day by 2009.

The Venezuelan president explained the reasons for the shortages of milk and beef products that the country has experienced over the last year. Chavez referred to a chart showing how national milk production has remained relatively equal in recent years, whereas national consumption has exploded in the last two years. He insisted that it is the same situation with beef, forcing the country to import large amounts of milk and beef.

Chavez explained that world milk consumption had also grown by 20 percent in the last 10 years, in part due to China's increased consumption of milk, whereas milk production has only grown by 1 percent, causing world-wide shortages.

The Venezuelan government has made the claim that these shortages, as well as government price controls, have led to speculation on the part of large dairy producers who sell their production to producers of cheese and other goods in order to avoid the price controls.

In response, Chavez threatened to expropriate dairy farms that refuse to sell their production, or who sell it abroad. At the same time, he announced a 40 percent increase in the price of milk to help milk producers.

"I am aware that the price of milk is coming up short. That's why I am willing to elevate it a little to benefit all the primary producers," he said, but he issued a warning to large milk companies.

"I am going to warn the large milk-processing companies: Any producer that doesn't sell their milk to the nation will be treated as a traitor," he said.

But ultimately the government strategy is to increase national production through the construction of these "socialist" milk-processing plants, along with cattle-producing zones in the surrounding areas to supply them. The milk plants are placed under the management and control of the local communal councils in the surrounding communities, with support from the national government in the form of credit and technical assistance.

The strategy also includes a continuation of turning unproductive land over to small producers for the production of crops or livestock. The president of the National Land Institute announced yesterday that the government distributed some 50,000 hectares (123,000 acres) in the last year and that they would continue with this in 2008.

"This year the expropriation of land will be projected to the development and production of cattle-producing farms around these milk-processing plants," he said.

Chavez assured that the nation's supply of cattle had already increased from 10 million head to 12 million head, and that by next year this number would reach 16 million. He assured that Venezuela would become a cattle "superpower" in the near future.

"We want to strengthen national production so we are fully supplied by February of 2009," he said.