“We lack everything” Frances Buitrago, a small shopkeeper in the city of Merida, commented to Green Left Weekly. “There isn’t any milk, rice, mayonnaise, oil, wheat, or butter.”
Luis Albonoz, who owns a small fruit and vegetable store in the same city, says his store hasn’t been directly affected by the food shortages that have occurred throughout Venezuela, but told GLW that “it affects us as consumers. Food is necessary and the prices we have to pay are too high. We have small kids so we have to pay the price.”
Asked who he thought was responsible for the problem, he replied: “It’s a problem of smuggling. Some people hoard large quantities and then they sell them at much higher prices.”
“We lack milk, rice, spaghetti, sugar, eggs, chlorine and toilet paper,” said Maximiliano Fernandez, as he looked around his packaged food and liquor store. “Every three days we buy milk but there is no powdered milk.”
The growing problem of food shortages in Venezuela has become a real point of discussion. Go to any supermarket or small shop and people are talking about it, complaining that they can’t buy what they need and sharing anecdotes about how expensive products have become.
Rising discontent over food shortages has become a major challenge for the government of Venezuela’s socialist President Hugo Chavez. More than a few analysts have pointed to the issue as one of the factors behind the defeat of Chavez’s proposed constitutional reforms — that aimed to strengthen popular power and help open the transition to socialism — in the December 2 referendum.
It has also exposed a number of problems that the Bolivarian revolution — as the process of change led by Chavez that aims to overcome underdevelopment and poverty is known — has been unable to overcome. Solutions to such problems are crucial to the survival of the process.
What Is Responsible?
It is undeniable that the campaign by the right-wing private media has been a crucial factor in fuelling discontent, demonstrating the ongoing influence the old ruling elites that own the private media continue to have. This campaign has helped make the shortages worse as spooked customers rush to stock up.
This campaign gathered momentum in the lead-up to the referendum. The percentage of people who felt that shortages were a problem increased from 64% in the third quarter of 2007 to 78% in the last.
At the same time consumption has been dramatically increasing in Venezuela, fuelled by a significant economic boom and the Chavez government’s social policies that have greatly increased the spending capacity of the poorest.
A recent report of the Venezuelan American Chamber of Commerce and Industry revealed that between 2004 and 2006, the real income of the poorest 58% of the population increased by 130% after allowing for inflation. This figure does not take into consideration other benefits that have come about as a result of the government’s social missions that provide free education and health care, nor the impact of the Mercals — state subsidized supermarkets that sell products at an average 39% below prices found elsewhere.
As a result, consumption has more than doubled from US$24 billion in 2004 to $52 billion in 2007. The increased consumption, with production falling well short of demand, partly explains the shortages.
During his January 20 Alo Presidente TV show, Chavez explained that production shortages are not just a Venezuelan issue. Using milk as an example, he pointed out how global consumption of milk had risen by 14.3% between 2002 and 2007, yet the number of cows for milk production increased by just 1%.
Quoting from the article “Forget Oil, the New Global Crisis Is Food” in the January 7 Financial Post, he said: “The impact of tighter food supply is already evident in raw food prices, which have risen 22% in the past year . . . wheat prices alone have risen 92%.”
Chavez said the causes included the effects of global warming, leading to increased droughts, as well as the fall of the US dollar and speculation on the market.
Another factor “is Bush’s crazy plan to use food to make fuel,” referring to the US plan to use subsidized corn production in order not to feed people, but rather cars run on ethanol.
This plan has led to the global price of corn increasing by 44% over the past 15 months, with “US corn exports in danger of seizing up in about three years if the country continues to subsidize ethanol production,”, according to the Post.
“And which are the countries most affected by this crisis?” asked Chavez. “Countries like ours that, as a result of a whole century of abandonment” of agricultural production, with the economy geared around exporting oil, “therefore do not have our production guaranteed.”
While these factors are real, there is more to the story. For ordinary consumers confronting rising prices and shortages of basic goods, opinions vary as to who is responsible.
As the referendum approached, the media campaign was clearly biting, with polls indicating that people were increasingly directing their discontent towards the government, rather than the capitalist owners of supermarkets or agribusiness.
A survey published in October and conducted by Datanalisis, one of the more reliable polling agencies in Venezuela, revealed that 88.4% believed that the solution lies in the government and private companies working together, with 88.1% saying that private companies should be producing more.
Asked if they believed that government price controls — introduced in 2003 to deal with the economic devastation caused by a bosses lockout that aimed to overthrow the Chavez government — were causing shortages, 69.3% said yes.
In response, the government has removed price controls on all but 20 products. Previously some 400 products were subject to controls in an attempt to assist consumers.
The removal of the controls has been welcomed by capitalists and private media, who have blamed them from the beginning for causing the shortages. The argument presented is that, since producers were being forced to sell their products at lower than market prices, production would drop automatically as there was no incentive to continue it at either existing levels or increase it.
This argument is true in a capitalist economy, where the sole purpose of production is to generate the greatest possible profit for the private owners of the means of production. If a capitalist can produce something else that makes them more money, they will, regardless of the social consequences.
However, the process of change in Venezuela has increasingly aimed at moving away from organizing the economy along those lines. The Chavez government has increasingly been implementing policies, such as price controls, that go against the interest of the capitalists in order to gear the economy towards the needs of the majority — a shift Chavez has described as an attempt to construct a “socialism of the 21st Century.”
In response, the capitalists have attempted to protect their interests by trying to overthrow Chavez. It is no surprise that Venezuela’s chamber of commerce, Fedecamaras, was a leading force in the failed military coup against Chavez in April 2002 and the bosses lockout that started in December that year.
The capitalists have fuelled the food shortages by holding goods back from the legal market where price controls lower profit margins and then selling them illegally at exorbitant prices on the black market. Another way around the price controls has been to smuggle food out of Venezuela to be sold in neighboring Colombia.
In this way, as well as maximizing profits, capitalists also hope to destabilize the government.
That this would be an outcome of price controls over an economy still predominantly capitalist should come as no surprise. Yet it appeared it did for the government, which was completely unprepared for such problems.
Even worse, sections of the corrupt state bureaucracy helped exacerbate the problem while attempting to deny it existed.
The government has taken measures attempting to overcome the problem, including, over the last three years: decreeing the creation of 21 agribusinesses through the state-owned Venezuelan Agrarian Corporation; financing 51 Companies of Social Production (EPS), mainly cooperatives; creating several new factories through joint ventures with Cuba and Iran; and establishing 6000 free food houses for the neediest.
It also initiated Mission Mercal, which coordinates 14,000 government-subsided stores, while making some moves to buy out or expropriate companies involved in food production.
However, these measures fall well short of what is needed to overcome nearly a century of neglect of the countryside, which has left Venezuela dependent on imports for around 70% of its food.
Mercal accounts for only 22.7% of national consumption. The new state-run agribusinesses and EPSs account for only 1.48% of agricultural produce.
Corruption and Bureaucracy
Furthermore, Mercal has become riddled with the corruption that is crippling the Venezuelan state, with many of its products appearing on the black market or in Colombia. Often elements of the National Guard, particularly those stationed on the Colombian border, have been found to be involved.
Additionally a number of the factories being constructed to help increase domestic production are well behind schedule, and many already built are producing well below capacity — suffering from bureaucratic inefficiency and, in some cases, active sabotage.
While several thousand factories have been shut down by their capitalist owners, who are refusing to invest and produce, only a handful have been taken over by workers and reopened under workers’ management.
This is despite the calls made by Chavez for workers to take over idle factories since 2005. The weak and disorganized state of the workers’ movement, with low levels of consciousness and organization, has combined with the problems of bureaucracy to hamper the revolution’s ability to respond to such sabotage.
Another factor is the slowness of the land reform process — which seeks to redistribute idle land owned by the state or large landowners to campesino (peasant) cooperatives to stimulate production. The problem is again that, while the revolutionary government has formal control over state institutions, its programs are being sabotaged by either consciously counter-revolutionary elements or through bureaucratic ineptitude — in this case within the National Institute for Land.
Frustration among campesinos has grown as many continue waiting for promised land and loans. At the same time, large landowners have increasingly resorted to violence against the campesino movement, with police and courts either unwilling or unable to bring the perpetrators to justice
Mobilizing People’s Power
It is in this context that Chavez made his recent call for an alliance with the “national bourgeoisie” — Venezuelan capitalists — in an attempt to stimulate production. He announced a 40% increase in the price of milk and more incentives to help milk producers.
However, the offer of help came with a warning: those who refuse to produce, or who sell their produce abroad, will be expropriated.
He called on the people and the military to join the battle against hoarding and speculation by monitoring stores and factories. Any caught violating the law are to be shut down and taken over.
Greater policing of the Colombian border has already seen more than 2000 tons of contraband food intercepted.
Dealing with the food shortages is essential for the survival of the government. Elections for governors and mayors will occur later this year, and with discontent at poor government management growing and the pro-capitalist opposition revitalized after the referendum defeat, some Chavistas are openly talking about the possibility of losing some important positions to the counterrevolution.
Relying on food imports and concessions to the capitalists to deal with the shortages, while possibly alleviating the crisis in the short term, cannot be a long-term solution.
Only by shifting control over production and distribution into the hands of the workers and communities can the issue be decisively tackled. The working people are not driven by individual profit but the collective needs of all.
The revolutionary process has already revealed this dynamic — the actions of working people organized from the grassroots smashed the December 2002-January 2003 bosses’ lockout by collective organizing that included taking over important points of production and distribution.
For this reason, the new milk plants the government is building will be managed and controlled by communal councils — elected grassroots bodies of popular power.
The government also announced in January the creation of PDVAL — a food production and distribution company to administered by the state oil company — to work parallel with Mercal. The food will be distributed in conjunction with a private distributor in municipal markets and through PDV petrol stations, which have been mooted to be handed over to communal councils to administer.
In the impoverished Caracas neighborhood of Petare, communal councils have already begun to demand that the local Mercals be placed under community control. Meanwhile, a section of the National Union of Workers (UNT) has called for the creation of a united front against hoarders and food shortages, calling meetings of unions, communal councils, and campesino and social organizations in the states of Aragua and Carabobo.
Federico Fuentes is a frequent writer for the Australian socialist newspaper Green Left Weekly and maintains the blog Bolivia Rising. He is a member of the Democratic Socialist Perspective, a tendency within the Australian Socialist Alliance. Tamara Pearson is a member of the Australia Venezuela Solidarity Network. This article first appeared in the Green Left Weekly on 1 February 2008.