Financial Times
June 10, 2013
By Benedict Mander

Courtesy of: Reuters

It turns out that President Nicolas Maduro thinks that the plan to introduce food rationing in Zulia, Venezuela’s most populous state, is “crazy”.

Regardless of whether he always thought that, or whether, perhaps, the increasingly unpopular president was responding to widespread rejection of the plan, he’s right – it is not the way to put an end to the problem of shortages that has become so acute that someone has even invented an app to help Venezuelans locate specific goods they are having difficulty finding.

Maduro was also right when he said that “the answer to our problems is to produce more”.

Let’s just forget for the moment that in saying this he was rather undermining the Zulia governor, Francisco Arias Cardenas, who had denied that the scheme even amounted to rationing in the first place, and that in fact it was aimed at preventing smuggling (if you wanted to do something about that, you probably wouldn’t produce more, but instead perhaps try and do something about the irresistible arbitrage opportunities in Colombia thanks to Venezuela’s price controls, or at the very least introduce stronger controls on the border).

Let’s also ignore the fact that the government has already put in place another rationing scheme in Zulia, for petrol, which by Maduro’s logic ought probably be pretty “crazy” too. Again, officials insist the idea is to prevent gasoline contraband, which is indeed rife in Zulia since it is magnificently profitable – some suggest it is an even bigger business in Venezuela than the cocaine trade.

In any case, increased production would certainly go a long way to solving Venezuela’s shortages problem. Ideally it would be an increase in the production of the goods that are scarce, especially food, but increased oil production might do too, as crude exports could provide the dollars needed to import more. This would probably be more practical in the shorter term, given the problems Venezuela has producing just about anything that is not oil (although that is not to say state oil company PDVSA does not have serious challenges of its own).

The problem is that, in the current conditions, Venezuelan businesses are unlikely to start producing much more. In order for this to happen, a lot needs to change: for starters, the business climate must improve, and that includes doing something about price and currency controls, something which Maduro has shown no signs of doing. And don’t expect state companies to pick up the slack – the government is even said to have seriously considered the offer of Venezuela’s largest private company, Polar, to help run underperforming state-owned food processing plants.

The app that aims to help Venezuela’s long-suffering shoppers, known as Abasteceme (or Supply Me) and which uses Google Maps and “crowdsourcing” to enable users to notify one another where a certain product is for sale, has so far only been downloaded 12,000 times. It is a scheme that promises to be infinitely more successful than Zulia’s still-born rationing plans.

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