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Food rationing to begin in oil rich Venezuela


It’s unbelievable that Venezuela has got to this extreme situation where the destruction of the productive apparatus, a sharp disinvestment and a hypercontrolled economy has made the most demand for products and services has to be met with imports.- VenEconomy

CARACAS
Petroleumworld.com, June 05 2013

In a sign Venezuela’s food shortages could be worsening, restrictions on the sale of 20 basic items subject to price controls, including toilet paper and chicken, are set to begin next week in its most populous state, officials said Tuesday.

A spokesman for President Nicolas Maduro’s government said it is incorrect to call the plan rationing because it is meant to fight smuggling of price-controlled food across the border into Colombia. He said there are no plans to extend the program nationally.

Details of how the system in Zulia state will work are still being worked out, said Blagdimir Labrador, the state governor’s chief of staff.

But Zulia will issue computer chip cards beginning next week that will limit consumer purchases of products including rice, flour, cooking oil, sugar and powdered milk, he said. The quantities each family will be allowed to buy, on a daily or weekly basis, have not yet been determined, he said.

The system will register purchases remotely on computer servers ‘‘so the same person can’t go to a different store on the same day and purchase the same product,’’ Labrador said.

The foray appears to be Venezuela’s first into food rationing. Communist-run Cuba has issued monthly ration cards for basic foodstuffs for decades, although the number of items has dwindled in recent years.

Labrador said the system will initially apply to 65 supermarkets in two cities, Maracaibo and San Francisco, in the state of 3.7 million people bordering Colombia.

The president of the state’s supermarket association, Andres De Candido, said he did not believe the system, run by the state-owned CANTV telecommunications company, would be ready in all supermarkets by next week but said his group is ready to support it if it truly gets food-smuggling to Colombia under control.

Authorities said that is the sole intent.

‘‘This is only in Zulia state and it is not rationing,’’ said Information Ministry spokesman Raimundo Urrechaga. ‘‘It is focused only on Zulia, to control contraband.’’

That’s fine with Angelica Silva, a 52-year-old housewife who couldn’t find butter or toilet paper in a downtown Caracas market Tuesday.

‘‘This isn’t a poor country like Cuba, where we all depend on the government’’ she said. But Silva was still worried: ‘‘What scares me is that there will be more scarcity, and nobody will tolerate that.’’

To fight gasoline-smuggling to Colombia, Zulia and another border state, Tachira, have in the past two years imposed a computer-chip system that limits purchases. It does not appear to have stemmed the cross-border smuggling of heavily subsidized Venezuelan gasoline, however.

Many economists are skeptical that limiting food purchases, or rationing, can end worsening shortages of basic foodstuffs and medicine that Venezuelans generally blame on government mismanagement in this nation that gets 97 percent of its export earnings from oil.

For one, price controls for more than 100 items imposed more than a decade ago under the late President Hugo Chavez are regularly ignored in all but state-run markets. Merchants say adhering to them would be suicidal for their businesses given inflation that reached a 29.4 percent annual rate in April.

Meanwhile, Venezuela’s bolivar currency fetches nearly five times the official rate on the black market.

Venezuela competes with Argentina in the Americas among major nations for the dubious distinction of most troubled economy. In both nations, currency controls and a deepening U.S. dollar shortage are widely blamed for economic turmoil.

Venezuela’s government has since October been steadily reducing the amount of dollars available to businesses without explanation. That has starved companies for raw materials and imports, forcing production cutbacks and triggering shortages.

In February, their predicament worsened as a system disappeared that allowed businesses and investors to obtain dollars by purchasing government debt.

An economist at Andres Bello University, Ronald Balza, said he doesn’t see how rationing certain foodstuffs can address the true cause of shortages.

‘‘The reason for shortages (in Zulia) is the same as it is in the rest of the country: fixed prices, supply problems and the preventative purchases that consumers make every time new (higher) prices are coming.’’

The Venezuelan Central Bank’s shortage index in April was 21.3 percent — the portion of a basket of more than 100 items sought on store shelves but unavailable. That’s the highest it’s been since the bank began publishing it in 2009.

At the same time, some economists say Venezuela is heading into a recession. The Central Bank said the economy grew just 0.7 percent in the first quarter.

Finance Minister Nelson Merentes said last week that he would travel to the United States and Europe to seek investment to try to shore up a deficit of dollars. He did not disclose the size of the deficit.

The bulk of Venezuela’s $26 billion in international reserves as of May 10 were in gold and other monetary instruments with less than $3 billion in cash available, according to analyst estimates. Opposition economists accuse Chavez of looting the treasury in order to spread largesse and win re-election last October.

After Chavez’s death from cancer in March, Maduro won a special presidential election by a margin of just 1.5 percent.

 

Story by Jorge Rueda and Frank Bajak from Associated Press -AP.
AP.com
| June 04, 2013

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