Venezuela Expropriates Bakeries Accused of Price Gouging

Venezuelan authorities expropriated two bakeries Wednesday, after inspectors said the businesses were found gouging consumers.
By Ryan Mallett-Outtrim
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Industry groups say the government isn’t importing enough flour to go around, though inspectors say supply shortages are exaggerated.  (Prensa SUNDDE)
Industry groups say the government isn’t importing enough flour to go around, though inspectors say supply shortages are exaggerated. (Prensa SUNDDE)

Puebla, Mexico, March 17, 2017 (venezuelanalysis.com) – Venezuelan authorities expropriated two bakeries Wednesday, after inspectors said the businesses were found gouging consumers.

The two bakeries are located in the country’s capital Caracas, and were allegedly caught selling under-sized bread loaves and rolls. Bread is considered a basic consumer good by the Venezuelan government, and is subject to price controls.

“A loaf should weigh 180 grams,” said William Contreras, the head of Venezuela’s consumer protection agency, SUNDDE.

“These gentlemen here produce [their bread loaves] as 140 grams, and charge it as though it were 180,” Contreras said after inspecting one of the bakeries, Mansion’s.

Mansion’s and one other bakery will now be run by the state for at least three months. According to Contreras, both establishments will be handed over to the CLAPs, a government initiative aimed at curbing food scarcity.

The expropriations were the result of SUNDDE inspections of more than 400 bakeries across the city, prompted by consumer complaints. Along with allegedly violating price controls, consumers have also accused bakers of only baking at certain times of day, creating long lines. Bakers have likewise been accused of trying to push more expensive products on the first customers in line, and only selling standard bread rolls late in the workday.

According to Contreras, bakers should ensure they have basic products available throughout the day.

“Production must be continuous,” he said.

Contreras has warned more bakeries could be seized by the government if they’re found violating the law, and said inspections will continue.

The country’s largest federation of bakeries, Sintra-Harina, has responded by accusing the government of being heavy handed.

“The government isn’t importing enough wheat,” Sintra-Harina head Juan Crespo told the Miami Herald.

According to Crespo, Venezuela needs around 120 tons of wheat a day to satisfy consumer demand, and claimed current import rates aren’t meeting this target.

“If you don’t have wheat, you don’t have flour, and if you don’t have flour, you don’t have bread,” he said.

The government has dismissed claims there isn’t enough flour to go around. Instead, Contreras said bakeries are purchasing flour at rates subsidised by the government, then refusing to produce basic goods subject to price controls, such as rolls and loaves. In one bakery, authorities said they found 52 sacks of flour. Of these, two were allegedly used to make basic products, while ten were being used for more expensive products such as pastries. SUNDDE has warned practices like this violate a law requiring bakeries to use at least 90 percent of subsidised flour to produce controlled products.