Is hoarding causing Venezuela food shortages?

[www.inewsguyana.com] – These are tough times for small shop owners like Darwin Calero. Surveying jars of mayonnaise, canned tuna and eggs at his stall in a working-class market of Caracas, he’s worried product shortages and ongoing demonstrations are ruining his already-struggling business.

“Cooking oil, corn flour, margarine, milk, soap and detergent are the hardest things to get,” he said. “Distributors come here but sometimes they have no products to sell.”

Shopping at a similar outdoor market in Valencia, the country’s third-largest city, Aleimar Gimez is also fed up.  “I woke up at 7am to find the food I need and I just got one bag [of corn flour],” she said. “The situation is worse than ever.”

Protesters barricading roads around the country frequently site shortages as a cause of their anger.

Like virtually all problems in Latin America’s largest oil producer, rhetoric around shortages and alleged hoarding follows a divisive political binary. President Nicolas Maduro blames hoarders and speculators for taking food out of the mouths of the nation, while the opposition contends economic mismanagement underpins empty shelves. Al Jazeera interviewed more than a dozen stakeholders with direct knowledge of the problem, including store owners, consumers, farmers, economists and officials on various sides of the political divide.

Trying to decipher rhetoric from reality is never easy, but there seem to be four key factors driving shortages: the lack of US dollars and other currency quagmires, price controls, food being moved abroad where it can be sold for higher prices, and problems in the supply chain.

The most basic of bread-and-butter issues, shortages are debated in the press, at street markets, online and in homes across the country.

‘Economic war’

Drinking cold beers with a group of mates under a midday sun in his working-class neighbourhood, Francisco Luzon blames the country’s entrenched elite for the problems. “There is some truth about the economic war from private entities, as they want to increase profits,” he said.

“Distributors buy large quantities of products here and sell them in Colombia,” said Luzon, who runs a business producing iron gates for houses. “Selling contraband is a serious problem. People here are taking large quantities of products meant for Venezuelans and selling them in Colombia.”

His friend, local businessman Onexis Valdespino, agrees. “One pack of Arena Pan [corn flour] is 6 bolivars in Venezuela. Once you have made the exchange [accounting for the 800 percent currency difference on the black market] it’s 200 bolivars in Colombia.” 

Venezuela subsidises basic food products, making them cheap when they are available. State support for basic products, coupled with exchange-rate issues, entices black-marketers and hoarders to sell food outside the country.

An investigation by Reuters confirmed the beer-fuelled Friday morning allegations; residents of border states in Venezuela drive subsidised local food into Colombia to sell for a quick profit, exacerbating domestic shortages.

Despite talk about shortages, outright hunger is not considered an issue in today’s Venezuela. It’s a marked change from 1989, when politics of the belly pushed residents into the streets in a series of bloody riots. 

The caloric intake of the average Venezuelan rose by 50 percent during the first 12 years of socialist governance, according to the National Nutrition Institute. But that’s not good enough for many residents of what should be a wealthy country. In a house near the market where Valdespino and Luzon spent their Friday, four generations of the Correa family and some friends gathered on the porch of their modest home.

“The government gives no dollars to anyone, that’s why the shortages are happening,” Manuel Correa said, sending one of his nephews to a nearby store to buy soda. “It takes three months to get dollars [to import products] and there are rumours the government is out of foreign currency.”

Short on dollars

Venezuela has a controlled currency, distorting usual import patterns. Officially, one dollar is worth 11.3 bolivars, but on the black market, a dollar in cash will fetch 80 bolivars. Businesses must apply to the government to formally access dollars; sometimes those bureaucratic approvals take months or never come at all, leaving warehouses empty.

International bond markets back Correa’s assertion about low-dollar reserves. Moody’s and Standard and Poor’s have downgraded Venezuela’s debt to junk status, meaning the world’s financial elites don’t think there is much left in Caracas’ piggy bank.

“We used to produce food here, three or four years ago, we could produce a lot,” Francisco Garcia said as others on the porch nodded. “Then the government started interfering in farms, expropriating them. Now they don’t produce and everything is imported.”

Venezuela’s National Land Institute aims to expropriate 350,000 hectares this year. The government says most of this is idle land, and small farmers need access.

“We have gotten a lot of opportunities; the government is dissolving the holdings of big landowners,” said Celecio Virguez, a bean farmer from Lara State as he marched with supporters of Maduro in Caracas. “They have given loans to producers, training and education.”

But critics say the government is destroying productive farms, and moving their supporters onto expropriated land. [Al Jazeera].