Venezuela´s Agriculture Expected to Boom in 2004. Central Bank Frees Resources

After Venezuela's Central Bank announced it would allocate 900 million US dollars for agricultural loans, the country is expected to benefit from a boom in agriculture to lower dependency on imports.

Caracas, Venezuela Feb. 2 ( Venezuela’s Minister of Agriculture and Land, Arnoldo Marquez, announced on Sunday that the govenrment agricultural development plan know as Plan Zamora invested 70.000 million Bolivars (43 million US dollars) in 2003, benefiting 17.000 farmers, and activating 21.000 new hectares by providing loans, tractors, plows and other farm machinery.

Plan Zamora was launched by President Hugo Chavez in February of 2003 after the opposition-sponsored lock-out and sabotage of the oil company forced the government to import food. Some local food producers had joined the lock-out to force Chavez our of office. The opposition actions caused losses of 10 billion US dollars to the overall economy, preventing the government from investing more in agricultural development.

Last week, Venezuela’s Central Bank announced it would allocate 900 million US dollars for agricultural loans through different financing instruments to private banks. Chavez has been requesting the Central Bank to free up the money as the country’s international reserves have grown significantly within the last year.

Chavez said that the government must monitor this promise by the Central Bank. “They have said the same before. [Commercial banks] blame the farmers for allegedly not having development projects worthy of financing.”

Marquez met with local bankers, who agreed on increasing resources allocated for loans to help maintain and consolidate 1.6 million hectares of land currently in use. The government’s plan is to increase the number of hectares used to 2.8 million in 2004.

Venezuela imports 70% of the food it consumes. As a way to lower the country’s dependency on imports, the government has recently implemented an aggressive program to develop agriculture. Through the Land Reform Chavez has sponsored, thousands of acres of public land have been transferred to farmer’s cooperatives. Along with the land, farmers have received low interest loans, machinery and technical support from the Ministry of Agriculture.

Micro financing booms

Venezuela’s Micro financing Development Fund (Fondemi) provided 20.000 million of Bolivars in loans in 2003, according to it president Isa Sierra.

Fondemi has used funds from the Social Development Bank (Bandes), and the amounts of loans provided average from 2 to 3 million Bolivars (1.250 to 1.875 US dollars)

Fondemi was created in 2001 in order to provide loans to small businesses whose projects were rejected by commercial banks. Fondemi also certifies the creation of micro banks or community banks. 500 non governmental organizations or municipal entities have been authorized to provide loans to local small entrepreneurs. These micro banks are in charge of approving, monitoring and collecting the loans they provide in their communities. Home based businesses represent an important portion of the beneficiaries of these loans.

The government hopes that financing and promotion of small businesses will help lower unemployment and foster long term economic growth.