Hoarding, Irregularities Lead To Seizure Of Venezuelan Sugar Mills

Four thousand tons of sugar hoarded in the warehouse of the Santa Elena sugar mill in the central state of Portugesa has caused the Chavez government to seize the plant.

Mérida, March 10, 2010 (venezuelanalysis.com)– Four thousand tons of sugar hoarded in the warehouse of the Santa Elena sugar mill in the central state of Portugesa has caused the Chavez government to seize the plant.

Richard Canán, Venezuela’s Commerce Minister, announced the occupation of the plant after an inspection carried out on Tuesday. 

“We’re going to guarantee that these plants are operating in a way to ensure the supply of sugar for the Venezuelan people.” Canán said  “We have the power to initiate expropriation processes of sugar mills or any type of plant where there are irregularities.”

Venezuela has been facing severe sugar shortages for many months, attributed by government officials to a series of irregular activities being carried out by sugar producers seeking to increase profit margins. 

The government regulates the price of sugar for the domestic market at 3.73 BsF per kilogram.  Producers seeking to avoid the regulated price engage in a series of practices, which include illegal export to Colombia, selling unrefined sugar to producers of chocolate products and other sweets, and keeping large amounts of the product from the domestic market. 

Hoarding, by creating an artificial shortage, propagates an informal market in the country, which some producers and middlemen exploit in order to maximize profits.  Sugar on the informal market can sell at more than double the regulated price.

According to Canán, this month’s sugar cane harvest will produce some 200,000 tons of sugar.  As such, there is no reason for shortages of the product in Venezuela.

Authorities became aware of Santa Elena’s involvement in illegal distribution practices when sacks of sugar originating from the plant were found being sold on the informal market.

The mill was also cited for various labor and environmental violations including unsafe working conditions and the illegal disposal of untreated wastewater in a local creek.

Another sugar plant, Santa Clara in the state of Yaracuy, has also been implicated in distribution irregularities and has also been temporarily occupied by the government.

The seizures of the sugar mills will last for 90 days during which time the Ministry of Commerce will work to ensure that the product reaches its appropriate and legitimate local markets. 

Community Involvement

The inspection leading to the occupation of Santa Elena was carried out in collaboration with the workers of the mill, local community councils, members of the Institute for the People’s Defense and Access to Goods and Services (Indepabis), the Social Comptroller, and the Superintendent of Silos.

Inspections were carried out throughout the country on Tuesday, with a special emphasis being placed on 15 sugar mills and more than 107 sugar packaging plants.

Throughout the inspections, the government emphasized participation of community members.  Neighborhood residents, organized in community councils, have exercised their rights to perform duties of social comptrollers as granted under the country’s Community Council Law.  

In the Caracas neighborhood of San José, community participation led to the identification of a tractor-trailer filled with 30 tons of sugar alleged to be hoarded on land with a history of irregularities.

According to the Civil Registrar of the neighborhood, Carlos Urbina, 34,600 tons of sugar were seized on the same plot of land last January 12th

“We have to guarantee that basic food commodities reach the people” said Urbina.