Country Focus: Venezuela

by Intern Intern1
Share This:

Crop production is centered in the northern third of the country, while the central flatlands are devoted to raising cattle. The average farm size is 80 hectares.

Agricultural policy. The economic and trade reforms implemented in 1989 have affected Venezuelan agriculture significantly. Previously, the agricultural sector was heavily subsidized, with direct or indirect assistance applying to everything from production inputs to retail food prices. Grain imports were subject to quotas, and the private sector could import only under license.

After 1989, many subsidies and trade controls were reduced or eliminated, including production supports, food subsidies and import quotas and licensing. Because sorghum is politically sensitive, it still is protected by a price floor, albeit reduced from pre-1989 levels, and coarse grain imports are not permitted until the domestic sorghum crop has been marketed.

The reforms caused some disruption as the agriculture sector made the transition to a more liberal economic regime. The difficulties have been exacerbated by the general economic troubles that began in 1993.

Among the more recent problems are a 70% inflation rate, interest rates in excess of 50%, financial reforms allowing banks to reduce the percentage of agricultural loans in their portfolios and adoption of a strict and cumbersome foreign exchange control mechanism.

To try to restrain inflation, the government in July 1994 put price controls on numerous food products, including most wheat-based products such as wheat flour, semolina, pasta, bread and crackers. The price levels were designed to assist consumers, with little thought given to producer or processor returns.

Consequently, profit margins for grains and foods products declined, and by November, Venezuela faced the threat of basic food shortages. The government reacted by raising prices for the most vulnerable items; although wheat shortages were less severe than other commodities, in February 1995, the price of flour was increased to 101 bolivars per kilogram (U.S.$0.59) from 88 bolivars (U.S.$0.52).

Flour milling. Venezuela has 16 flour mills and 10 milling companies, with annual milling capacity of 1.8 million tonnes. Capacity utilization in 1995 is estimated at 60%, as the recession caused a contraction in the baking sector, increasing the percentage of idle milling capacity.

Venezuela's mills are concentrated near Caracas, along the northern coast and inland near Ciudad Bolivar. Three milling companies account for 75% of wheat processing and are subsidiaries of multinational companies. Flour is packaged predominantly in 50-kg paper bags for domestic industrial baking.

Total milling capacity has not grown in the past seven years. Although several mills expanded, one was closed. Mill expansion in the past three years has been driven by expectations of export flour and pasta sales, but the persistent recession has tempered those hopes.

The current trend in the milling and pasta industries is to modernize and upgrade technology. A new 160-tonne per day durum mill is expected to begin operations in 1996.

Import licensing was eliminated in 1992, but in mid-1994, the government imposed a restrictive foreign exchange control policy that has caused problems for millers.

Under the policy, wheat importers must apply for U.S. dollars through the Technical Office for Exchange Administration (OTAC), and initially, approval took up to 30 days or longer. Meanwhile, millers could not pay for their wheat imports, forcing them either to delay shipments or request extended credit from exporters.

As the situation worsened, the government temporarily designated wheat a critical commodity, which enabled OTAC to give a higher priority to currency exchange for wheat imports. Over time OTAC has become more efficient, but the process remains cumbersome for millers.

The Venezuelan flour milling industry has a milling association, ASOTRIGO (Asociacion de Molinos de Trigo), that was instrumental in the opening in 1994 of a milling school in Puerto Cabello. The school, Escuela Latinoamericana de Moineria or ESLAMO, is a joint venture of ASOTRIGO, the Latin American millers' association and U.S. Wheat Associates.

ESLAMO provides training in flour milling and related subjects for millers throughout Latin America. ASOTRIGO funded the facility's construction and related costs, while U.S. Wheat Associates provided equipment.

Feed industry. In recent years, overall demand for feed has softened slightly with the recession-induced cuts in animal herds. Although feed producion in 1994, at 2.9 million tonnes, was up from 2.2 million in 1990, it was down from 3.1 million in 1992. Some 66% of annual feed production is poultry feed, with pork feed accounting for 19% and dairy cattle feed accounting for 9%.

Imported yellow maize is preferred as the major ingredient for quality and price reasons, but the industry has accepted government import restrictions that apply until the domestic sorghum crop is marketed. Since 1992, feed manufacturers also have incorporated small quantities of wheat, rice and tapioca in their blends.






(1,000 tonnes)






Wheat flour















1994-95 marketing year unless otherwise noted *1990-91, wheat equivalent

Source: International Wheat Council (wheat flour data); U.S. Department of Agriculture (all other)