Venezuela

Hunger For Breakfast? Venezuela Facing Deep Shortages

A year after the death of President Hugo Chávez, food and consumer shortages are spreading through Caracas along with protests. Blame over-regulation or capitalistic hoarding?

Rumblings in the streets of Caracas
Rumblings in the streets of Caracas
Daniel Salgar Antolínez

CARACAS – "There's chicken in the Bicentenario!" ran the rumor around the capital one recent morning - referring to a well-known chain of big-box retailers. In one Bicentenario branch in the Plaza Venezuela people were practically rioting to get chicken, a staple product turned "scarcity" in Caracas.

But for those looking to stock up, there were few left that day, and only two per shopper could be purchased.

At least there were some chicken, whereas milk and sugar and corn flour were all gone. There was soya oil but no sunflower oil. In the Plan Suárez supermarket in the neighborhod of La Trinidad, there was flour - wholewheat only - but no milk. They did have toilet paper.

Things were worse in another of the big shops in Caracas, Excelsior Gama in the Avenida Rómulo Gallegos: no milk, no sugar, no toilet paper. Only trolleys filled with cookies, four packs allowed per person.

Shortages are not just for the private supermarkets. The stated-owned distributors PDVAL created in 2008 by President Hugo Chávez as an affiliate of the state oil firm, and intended to guarantee food supplies within the socialist economy, began to impose restrictions on February 10. Consumers could buy staples like milk, oil or corn flour once a week, and must register their identities in a central database accessed in any PDVAL outlet.

It is normal in Caracas to have to visit several stores to obtain basic foods. All shoppers are familiar with this round, which is about buying what you find not what you want. Some housewives are visibly pleased when they find a container of milk, after three or four hours searching.

The shortage index has reached 28%, meaning, in 28 of every 100 shops, there is no chicken, milk, sugar, corn or wheat flour, butter, meat or hygiene products. Families are no longer assured of even meeting their basic needs, as the minimum wage is now a little over half the cost of the basic food basket, the state statistical agency CENDA recently reported. The Central Bank says food prices rose 79.3% over the past year.

The situation is similar in shops selling household and electronic goods. One, the Max Center, has put toys on shelves that earlier displayed televisions, while half its space was closed off. Very few washing machines remained. People practically bought everything when President Nicolás Maduro decreed price controls just before December's municipal elections.

The measure, intended to restore "socialist" economic balance, sought to fight an "economic war" being waged by the private sector, which the Government said "has taken profit margins in some imported products to over 1,000%."

As soldiers were tasked with preventing shops from speculating, thousands went shopping for household appliances at rock-bottom prices.

By decree

Maduro has lowered prices by decree, used the army to fight inflation, promised televisions to the poor and thrice approved an increase to the minimum wage. These initiatives have merely put more capital to flight and boosted investors' distrust of Venezuela.

The Government insists shortages are due to private firms hoarding food, but people increasingly disbelieve such assertions, at least in the long supermarket lines where different classes mingle.

Shortages are no novelty here. There were shortages when Chávez died a year ago, but today they are more blatant. And there was also inflation, reaching 56.3% in 2013 according to official figures, one of the five highest national rates in the world.

Economist Alexander Guerrero says the problem of shortages is not in the supply chain, as shortages are not occasional. "We are talking of a chronic, structural shortage of more than four or five years, caused by the private sector being drained of capital, monopolization of food imports and the exchange market, and falling oil revenues," explained Guerrero. "All these created a shortage of foreign exchange. Without currency, firms cannot buy abroad and there is no production at home, hence the shortages."

What next? Several shoppers mumbled about the risk of spreading hunger in Venezuela "if things go on like this." Academic Luis Mata Mollejas agrees and criticizes price controls as "striking at private activity." He warned that businesses would not replace stocks "at unknown costs, which in Venezuela's case will increase, to sell at a loss."

The effect he quipped bitterly was "hunger for breakfast."

Guerrero says the economic collapse is increasingly evident: "These downfalls have two aspects, hyper-inflation and shortages on the one hand, and inability on the other to pay, due to lack of foreign exchange. We're seeing this now, and it is result of Maduro's increasing radicalization of the Bolivarian Revolution model."

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