Tag Archives: inflation

Jun
28
2010
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Shopkeepers become soldiers in Chávez’s economic war

"Sorry, we don't have chicken or meat..."Rory Carroll reports from Venezuela where, in an effort to sustain food production based on government-subsidised stores and restaurants, Hugo Chávez is criminalising shopkeepers who want to set their own prices. Great video from the Guardian UK!

You could call Omar Cedeño many things: a class traitor; a tool of international capitalism; a criminal suspect; even an enemy of Hugo Chávez’s socialist revolution. You could also call Cedeño, who sells meat from a cramped shop, a butcher.
He has been a fixture in the Candelaria district of Caracas, Venezuela’s capital, for 20 years, flapping in and out of his shop in a grubby white coat, arranging cuts of beef, pork and chicken in a display case, joshing customers.
There are fewer jokes these days. Military police recently seized Cedeño and dozens of other butchers on suspicion of overpricing. Cedeño was handcuffed, stripped, interrogated at an army base and charged with speculation. If convicted he faces up to six years in jail.
“I’m not a capitalist or a socialist, I’m just a worker. People are being arrested for doing their job,” said the 47-year-old, now back at his shop but obliged to report to a tribunal every 15 days until the trial.
Cedeño’s alleged crime: selling beef for £4 a kilo, well above the regulated price of £2.58. He does not deny it – prices are marked on a white board behind the counter. “I’ve got to cover my costs. What business doesn’t? Yet eight officials came here to arrest me. It’s an abuse of power.”
Most economists attribute Venezuela’s soaring inflation to loose monetary policy, exchange controls, devaluation and anaemic domestic production, dynamics that show no sign of abating.
“The government has boxed itself in with a misguided policy mix of rampant spending and price and foreign exchange controls that has resulted in a growing output gap and galloping inflation,” said Patrick Esteruelas, of Eurasia Group political consultancy. He added that the government, unwilling to risk austerity measures in the run-up to September’s congressional elections, was deflecting blame. “It has found it highly convenient to persecute private food retailers.”
Venezuela’s authorities disagree. They say private firms are cheating customers with unjustified price rises that are driving 30% inflation, Latin America’s highest. Food prices are rising even faster, at 40%. According to Chávez, it is part of a plot by US-backed “fascist oligarchs” to destabilise his leftist experiment.
“Do you know why capitalist prices are so high? Because they are thieves, stealing from the people. Don’t let them trick you,” said the president during a TV broadcast last week. He promised to crush speculators and lower prices in what he termed an “economic war”.
The stakes are high. After 11 years in power the former tank commander’s ratings have slumped amid a recession, leaving his petro-state mired in stagflation, while the rest of South America booms. With legislative elections due in September, the president is offering socialism as an economic cure.
The strategy is to boost state-backed food production and sell output at subsidised prices, while curbing the private sector and capping its prices for staples such as milk, beef and coffee. “They know where we are headed, we are going to take from the Venezuela bourgeoisie,” the president told cheering supporters.
But problems are mounting. In the name of “nutritional sovereignty” the government seized 6m hectares (about 15m acres) of farmland, expanded cultivation and set up socialist co-operatives. Results are poor: beef, sugar, coffee and fruit production plunged. Grain and rice output initially rose, but fell last year.
Food imports soared to $7.5bn (about £5bn) last year, by some measures a sixfold increase since Chávez took office. Partly that was because an oil boom and anti-poverty policies increased people’s spending power, but mainly it was for want of domestic production, according to Cavidea, the food industry body.
Record oil revenues funded a government chain of subsidised grocery stores and markets, a pillar of Chávez’s popularity. At an open-air stall, shopper Maria Clemente, 60, said: “I’ve just stocked up on rice, sugar, corn, milk, all at rock-bottom prices.” The government also opened a chain of fast-food restaurants selling arepas – cornbread sandwiches – at bargain prices. Quotes from leftist thinkers line the walls and red stars adorn toilet doors. Recently in Parque Central’s restaurant, three TV screens showed Chávez, broadcasting live from another location, tucking into an arepa. “Mmmmm, this is Fidel’s favourite,” he said, referring to his Cuban ally.
But critics are exercised by another odour: that of 80,000 tonnes of imported food discovered rotting in government warehouses, a scandal that prompted the arrest of senior officials. Some government-run stores are showing strain: bare shelves and scarce meat. “No chicken, and they make you buy tomato sauce with everything,” grumbled one shopper, Elvira Sierra, 54.
Undeterred, the government has pressed ahead with the takeover of farms, processing plants and supermarkets and threatened to nationalise Polar, Venezuela’s leading beer and food company. Troops have seized company land, impounded “illegally stored” food and made hundreds of inspections. It is a risky target given that Polar is to Venezuelans what Cadbury, Hovis and Carling are to Britons. The company declined interview requests.
The authorities also continue to prosecute smaller fry for selling above regulated prices. “It’s becoming impossible,” said Cedeño. “I’m supposed to sell meat at what it costs me to buy. How do they expect me to cover costs and stay in business?

You could call Omar Cedeño many things: a class traitor; a tool of international capitalism; a criminal suspect; even an enemy of Hugo Chávez’s socialist revolution. You could also call Cedeño, who sells meat from a cramped shop, a butcher. He has been a fixture in the Candelaria district of Caracas, Venezuela’s capital, for 20 years, flapping in and out of his shop in a grubby white coat, arranging cuts of beef, pork and chicken in a display case, joshing customers.

There are fewer jokes these days. Military police recently seized Cedeño and dozens of other butchers on suspicion of overpricing. Cedeño was handcuffed, stripped, interrogated at an army base and charged with speculation. If convicted he faces up to six years in jail. ”I’m not a capitalist or a socialist, I’m just a worker. People are being arrested for doing their job,” said the 47-year-old, now back at his shop but obliged to report to a tribunal every 15 days until the trial.

Cedeño’s alleged crime: selling beef for £4 a kilo, well above the regulated price of £2.58. He does not deny it – prices are marked on a white board behind the counter. “I’ve got to cover my costs. What business doesn’t? Yet eight officials came here to arrest me. It’s an abuse of power.”

Most economists attribute Venezuela’s soaring inflation to loose monetary policy, exchange controls, devaluation and anaemic domestic production, dynamics that show no sign of abating. ”The government has boxed itself in with a misguided policy mix of rampant spending and price and foreign exchange controls that has resulted in a growing output gap and galloping inflation,” said Patrick Esteruelas, of Eurasia Group political consultancy. He added that the government, unwilling to risk austerity measures in the run-up to September’s congressional elections, was deflecting blame. “It has found it highly convenient to persecute private food retailers.”

Venezuela’s authorities disagree. They say private firms are cheating customers with unjustified price rises that are driving 30% inflation, Latin America’s highest. Food prices are rising even faster, at 40%. According to Chávez, it is part of a plot by US-backed “fascist oligarchs” to destabilise his leftist experiment.

“Do you know why capitalist prices are so high? Because they are thieves, stealing from the people. Don’t let them trick you,” said the president during a TV broadcast last week. He promised to crush speculators and lower prices in what he termed an “economic war”.

The stakes are high. After 11 years in power the former tank commander’s ratings have slumped amid a recession, leaving his petro-state mired in stagflation, while the rest of South America booms. With legislative elections due in September, the president is offering socialism as an economic cure.

The strategy is to boost state-backed food production and sell output at subsidised prices, while curbing the private sector and capping its prices for staples such as milk, beef and coffee. “They know where we are headed, we are going to take from the Venezuela bourgeoisie,” the president told cheering supporters.

But problems are mounting. In the name of “nutritional sovereignty” the government seized 6m hectares (about 15m acres) of farmland, expanded cultivation and set up socialist co-operatives. Results are poor: beef, sugar, coffee and fruit production plunged. Grain and rice output initially rose, but fell last year.

Food imports soared to $7.5bn (about £5bn) last year, by some measures a sixfold increase since Chávez took office. Partly that was because an oil boom and anti-poverty policies increased people’s spending power, but mainly it was for want of domestic production, according to Cavidea, the food industry body.

Record oil revenues funded a government chain of subsidised grocery stores and markets, a pillar of Chávez’s popularity. At an open-air stall, shopper Maria Clemente, 60, said: “I’ve just stocked up on rice, sugar, corn, milk, all at rock-bottom prices.” The government also opened a chain of fast-food restaurants selling arepas – cornbread sandwiches – at bargain prices. Quotes from leftist thinkers line the walls and red stars adorn toilet doors. Recently in Parque Central’s restaurant, three TV screens showed Chávez, broadcasting live from another location, tucking into an arepa. “Mmmmm, this is Fidel’s favourite,” he said, referring to his Cuban ally.

But critics are exercised by another odour: that of 80,000 tonnes of imported food discovered rotting in government warehouses, a scandal that prompted the arrest of senior officials. Some government-run stores are showing strain: bare shelves and scarce meat. “No chicken, and they make you buy tomato sauce with everything,” grumbled one shopper, Elvira Sierra, 54.

Undeterred, the government has pressed ahead with the takeover of farms, processing plants and supermarkets and threatened to nationalise Polar, Venezuela’s leading beer and food company. Troops have seized company land, impounded “illegally stored” food and made hundreds of inspections. It is a risky target given that Polar is to Venezuelans what Cadbury, Hovis and Carling are to Britons. The company declined interview requests.

The authorities also continue to prosecute smaller fry for selling above regulated prices. “It’s becoming impossible,” said Cedeño. “I’m supposed to sell meat at what it costs me to buy. How do they expect me to cover costs and stay in business?

 
Jun
23
2010
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Chavez shuffles Venezuela Cabinet, troubled food distribution agency

Published by CNN

Chávez has reshuffled his Cabinet, naming nine ministers to new posts and placing the nation’s troubled food distribution network under the vice president. In addition, Chavez split the ministry of public works and housing into departments of transportation and communication, and housing and habitats.

The food distribution network has been run by the national energy and petroleum ministry but has been embroiled in controversy over its inefficiency and allowing tons of food to rot and go to waste.

The scandal grew in late May when containers with rotten, spoiled or expired food were found in a warehouse operated by the food agency, named the Venezuelan Producer and Distributor of Food but commonly known as PDVAL. The Venezuelan Bishops’ Conference recently called the scandal “a sin that heaven is crying over.” The bishops called on the government to punish officials involved in the issue and to take the needed measures to keep it from happening again.

Three officials were arrested this month in connection with the food waste: former PDVAL President Luis Enrique Pulido, general manager Ronald Flores and operations and logistics chief Vilyeska Betancourt.

El Universal newspaper published a story recently that said the 122,000 tons of rotten food found so far could have been used to feed 17 million Venezuelans — more than half the nation’s population — for a month.

Energy and Petroleum Minister Rafael Ramirez put much of the blame on the private sector recently, saying that an attack on PDVAL amounted to criticism of Chavez.

But Chavez seemed to realize he had a problem, and Vice President Elias Jaua said last week the government was evaluating whether to transfer control of PDVAL to the Ministry of Food.

Chavez started the food agency in January 2008 as a way to stop what he called stockpiling by private food companies.

According to a decree published Wednesday by the government in the Official Gazette, the following people have been named to Cabinet posts: Mauricio Rodriguez Gelfenstein becomes minister of communication and information, Jennifer Josefina Gil takes over at the education ministry, Hector Rodriguez is the sports minister, Maria Isabella Godoy Pena will be in charge of the president’s office and Juan Carlos Loyo Hernandez becomes minister of agriculture and land and president of the National Institute of Land.

Also named were Nancy Perez Sierra as minister for women and Isis Ochoa as head of the ministry for communes.

In addition, Francisco Jose Garces Da Silva becomes head of the newly created ministry of transport and communication and Ricardo Antonio Molina Penaloza assumes the top post at new ministry of housing and habitats.

 
Jun
23
2010
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Chávez is pushing Venezuela into food war

Original article from The Telegraph UK written by Damien McElroy, Foreign Affairs Correspondent.

Venezuelan bishops gave warning yesterday that the consequences of President Chavez’s drive to control the distribution of food would be to jeopardise supplies to ordinary citizens. Church leaders said the failure of the state-owned PDVAL, a subsidiary of the national oil company, to distribute food imports that rotted at the shores was “a sin that Heaven is crying over.”

One local worker said that the stench at the docks indicated the meat had been festering for weeks. He said: “It stank like 100 dead dogs.” The scandal emerged just weeks after Mr Chavez launched an “economic war on the bourgeoisie owners” of supermarkets, mills, rice plants and food distribution companies. The “battle for food” coincided with a botched devaluation in January that pushed up the cost of imports.

The result has been an economic catastrophe in the only Latin American economy in recession. Inflation leapt to 21 per cent in May as food prices rose 41 per cent over the level of a year ago. Soldiers have been deployed to raid private homes for food stores. Long lines regularly form on streets for basic commodities.

Mr Chavez is undeterred by failure. Last week he relaunched a chain of supermarkets his government had expropriated from a French-Colombian joint venture. He boasted that the 40-strong chain, Bicentennial Supplies, was already operating at a higher profit margin that under Western management.

The former paratrooper, who is an avowed fan of Robert Mugabe, the Zimbabwean dictator, and Fidel Castro, Cuba’s Communist tyrant, boasted that he has launched a new era of socialist supremacy. He said:

“Socialism is necessarily better than capitalism across the board and, that’s what we’re proving,”

The shortages have a sharp drop in Mr Chavez’s popularity ratings to 45 per cent a rare poll in March, from more than 70 per cent three years ago. “I am so fed up with these food shortages,” one shopper who had failed to reach the head of a queue for sugar reportedly said. “People get desperate and start behaving like animals.”

As complaints grow louder Mr Chavez has turned on the few remaining bastions of opposition in the country he has led since 1999. Guillermo Zuloaga, the owner of Globovision TV network, was forced to flee the country last month after he was charged with offending Mr Chavez by spreading false information.

The Caracas regime has threatened to move against billionaire Lorenzo Mendoza, owner of the Emprasas Polar, which owns the last significant supermarket rival to the Cuban-inspired state system. It has rejected Mr Chavez claims that it is profiteering from hoarding of food as “absurd and senseless.”