Traditionally, the national emphasis on the oil industry meant that little attention was paid to agriculture. However, the government of Hugo Chavez has aimed to increase self-sufficiency in food.
It claims success. “According to official statistics released by the Ministry, the number of hectares now being planted has reached nearly 2.4 million (5.9 million acres), up from 1.6 million (3.9 million acres) in 1998,” the Correo del Orinoco said last summer, quoting an announcement by Minister for Land and Agriculture, Juan Carlos Loyo. “Crops such as corn, rice, soybeans and coffee have also seen important production increases during the presidency of Hugo Chavez.”
A SMALL-SCALE PRODUCER
From the International Grains Council’s (IGC) point of view, Venezuela scarcely registers as a producer, with only 300,000 tonnes of sorghum appearing in its report for 2011-12, unchanged from the previous year.
It is expected to import 3.3 million tonnes of grain in 2011-12, down from 3.9 million the year before. That figure includes 1.5 million tonnes of wheat, up from 1.4 million the year before, and 2 million tonnes of maize, up from 1.6 million. Of that wheat, Venezuela is expected to import 390,000 tonnes of durum, down from 400,000 the year before.
The USDA attaché in Venezuela expects the country to remain a big importer, despite government policies, which are aimed at increasing domestic grain production.
“In accordance with its ‘Food Sovereignty Policy,’ the Bolivarian Republic of Venezuela (BRV) announced plans to increase domestic production of feed and food, but the gap between supply and demand remains large, and significant imports of basic feed and food grains will be needed to maintain consumption in the coming year and beyond,” an attaché report published earlier this year said.
The USDA office in Venezuela expects imports to continue strong, based on domestic food demand and the need for more feedstuffs by the expanding poultry and pork sectors.
The report identified some of the problems that face the industry.
“Grain producers and the food processing industry face disincentives such as controlled output prices that lag increases in production costs, squeezing or eliminating margins,” it said. “Expropriation of going agricultural concerns and land seizures makes production and investment less rewarding, too.”
GOVERNMENT PLANS FOR EXPANSION
The government has continued along the path of making plans for the industry.
“Despite limited results from government planning in 2010, the Ministry of Agriculture and Lands re-launched the so-called Integrated Agricultural Development Plan (PIDA), which sets as a goal production growth of about 110% for yellow corn, 61% for white corn, 244% in sorghum and 49% in rice,” the report said. “However, these goals are ambitious, given weather, price controls, a lack of sufficient production inputs and other disincentives.”
According to the Latin American Millers Association (ALIM), there are 10 mills in Venezuela with an overall capacity of 1.7 million tonnes. The country has 20,000 bakers and 18 pasta manufacturers. There are 13 cookie and cracker manufacturers.
The attaché cited the Venezuelan Wheat Millers Association (Asotrigo) as saying that Venezuela imports around 1.5 million tonnes of wheat per year, from which last year 38% (569,500 tonnes) went to the bread sector, 26% (379,700 tonnes) to the pasta industry, 5% (78,150) to the cookies sector, 6% (89,300 tonnes) to the packed flour sector and 25% (372,000 tonnes) to the feed industry.
The same report quoted the Venezuelan Pasta Association (AVEPASTAS) as putting pasta production in 2010 at about 363,000 tonnes, an increase of 12% compared with 2009.
Venezuela is one of the top 10 importers of U.S. wheat, ranking, according to U.S. Wheat Associates (USW), in seventh place in 2009-10. It’s one of the top five importers of U.S. durum wheat and U.S. hard red spring wheat.
As USW President Alan Tracy said in a speech published on the organization’s website, “The U.S. has a marvelous long-standing trade relationship with Venezuela. For decades Venezuela has been making some of the finest pasta in the world, and we are proud to provide the durum for that pasta. We value our relationships with the Venezuelan millers.”
HUGE MARKET FOR IMPORTS
Overall, Venezuela is a huge market for agricultural products, bringing in $5 billion worth in 2010, according to Venezuelan government data cited by the USDA.
“U.S. agricultural and food exports over the last five calendar years (2006-2010) have averaged $948 million,” it said in recent guide for exporters. “U.S. suppliers are seen by local importers, distributors and food processors as a reliable source in terms of volume, standards, prestige and quality. Additionally, many locally produced ingredients/products are either unavailable or insufficient.”
The government limits foreign exchange transactions. “Venezuela’s currency, the Bolivar, is set at 4.3 bolivars per U.S. dollar since January 2011,” the USDA said. “Exchange trading is illegal and all import transactions must be approved by the government’s foreign exchange administration commission (CADIVI). Importers must register with CADIVI for formal applications for foreign currency transactions. When approved, the transactions are then liquidated through the Central Bank and finally through commercial banks.”
The government imposes price controls on basic foods and processed foods. It sells price-controlled foods in state-owned MERCAL stores.
“The Government Food Distribution Network, MERCAL, or Mercado de Alimentos C.A., created in April 2003, markets food products at very low prices, usually even lower than the controlled-priced products sold by supermarkets,” the USDA said. “The program is focused on a basic basket of products which includes dry milk, precooked corn flour, black beans, rice, vegetable oil, sardines, pasta, sugar, bologna, margarine, deviled ham, eggs, mayonnaise and sauces. MERCAL’s food distribution web has expanded to 15,743 points of sales that includes mostly small stores and 35 supermarkets.”
The government has a food purchasing body created in August 1989 called CASA or “Corporacion de Abastecimiento y Servicios Agricolas.”
“CASA is in charge of purchasing domestic and imported food and agricultural products,” the USDA said. “Domestic purchases are made through several local suppliers including private companies.”
In a separate report, the USDA said that CASA had imported 3.07 million tonnes of food products during 2010, or about 83.5% of its total purchases; 608,741 tonnes were bought from domestic suppliers.
The list of imports includes 620,000 tonnes of rice, 44,500 tonnes of wheat pastas, 345,000 tonnes of yellow corn, 350,000 tonnes of white corn and 17,000 tonnes of margarine. CASA’s purchases from domestic sources included 185,460 tonnes of rice, 162,000 tonnes of corn flour, 76,500 tonnes of pastas and 26,400 tonnes of wheat flour.
The government’s reaction to food shortages in 2007 was the creation in January 2008, through the state oil company PDVSA of PDVAL, a subsidiary to produce and distribute food.
In December 2009, Corporación de Mercados Socialistas (COMERSO) was created to take charge of coordinating commercial distribution, and the government announced that PDVAL would administer and supply the COMERSO chain.
In January 2010, the Bolivarian Government announced the expropriation of the supermarket chain, Supermercados Exito, after several months of negotiations with its majority owners, the French group Casino and the Colombian Almacenes Exito, the USDA said. Then, in November 2010, the government bought 81% of the shares of the CATIVEN Supermarket Chain owned also by the Casino Group.”
The government also controls farm gate prices. “Venezuela has approved a 30 percent increase in the farm-gate prices of rice, corn, and soybeans,” the attaché reported in May. “Farmers have been waiting for several months for these price adjustments.”