Hugo Chavez has destroyed Venezuela’s food industry:
SOMETHING is rotten in the state of Venezuela: over 2,300 container-loads (and counting) of decomposing food, imported by the government last year and never distributed. The scandal is particularly embarrassing for President Hugo Chávez, since it comes amid growing shortages of basic foodstuffs in state-run grocery chains. But rather than rethink his statist food and agriculture policy, the president has declared “economic war” on the private sector. . .
Since 2003, the government has imposed price controls on many foodstuffs. In that year the government defeated a business-led strike which came close to paralysing the economy. The private sector has since faced mounting harassment.
The results have been persistent shortages and soaring inflation: the price of food and drink rose by 21% in the first five months of 2010, according to the Central Bank. Elías Jaua, the vice-president, this week blamed inflation on “speculators [linked to] political interests seeking destabilisation as part of a campaign strategy”, before a legislative election in September.
Basic goods are scarcer in Mercal and PDVAL shops than in private supermarkets, according to a survey by Datanálisis, a polling company. But the government is stepping up expropriations of farms, food manufacturers and distributors, in a bid to achieve what it calls state “hegemony” over the food supply. On June 7th it announced the takeover of 18 more food companies accused of violating regulations.
All eyes are now on Empresas Polar, a family-owned giant that is Venezuela’s biggest private food-and-drink company. . . Mr Chávez has often threatened Lorenzo Mendoza, Polar’s billionaire chairman, with expropriation. But as the rotting food shows, his government is better at destroying the existing order than at creating a viable alternative. Some 70% of Venezuela’s food is now imported, which generates ample opportunities for graft. Most of the farms and food companies the president has expropriated suffer from inflated payrolls, declining productivity and rampant inefficiency. His threats against Polar are rejected by a well-paid and loyal workforce. The company is one of the biggest remaining obstacles to the installation of Cuban-style communism in Venezuela. But to seize it now might well lose Mr Chávez the legislative election. As Venezuelans say “love, with hunger, doesn’t last.”