Venezuela’s season of starvation
WHEN it comes to buying food on his governmentmandated day of the week, William, a 44-year-old farmer, doesn’t mess around. At sunset each Tuesday, William, a father of two, joins a line of dozens of people outside the Unicasa supermarket in central La Victoria, 34 miles west of Caracas. William and a friend spend the night taking turns sleeping on the street, with one of them standing watch at all times to guard against robbers, line-cutters, and rats. When it rains, they take shelter under a palm tree, waiting for dawn. Their weekly ritual is the only way to guarantee a good spot in line the next morning, when the supermarket begins distributing basic foodstuffs like rice and cooking oil.
When morning arrives, William and his friend stand in line under the piercing sun, enduring temperatures of up to 95 degrees. At noon, they finally pass through a cordon of police and National Guardsmen to enter the supermarket and claim their prize for 18 hours of hell: the right to purchase 2 kilograms of cornmeal and 1 kilogram of pasta. “I am doing this because I have children,” William says. In the old days, he always voted for president Hugo Chávez and his successor, Nicolás Maduro. “How can this be happening? We have the world’s largest oil reserves, but we don’t have food.”
Many Venezuelans are asking those very same questions. The food shortage, precipitated by Chávez’s economic policies and a precipitous drop in oil revenue, is the worst in the country’s history. It has led the government to limit purchases of basic foodstuffs and set their prices. Nonetheless, basic goods such as coffee, sugar, rice, milk, pasta, toilet paper, hand soap, and detergent remain impossible to find. According to Datanalisis, the country’s leading polling agency, over 80 per cent of regulated foodstuffs have vanished from store shelves. As a result, many Venezuelans now make do with a single meal a day, or resort to rustling through garbage bins to find food. Others have begun hunting pigeons, dogs, and cats, as Ramón Muchacho, the mayor of the Chacao borough in Caracas tweeted.
Maduro, who succeeded Chávez in March 2013 and may face a recall vote this year, seems to have no answers for the unfolding crisis. And as temperatures rise, shortages deepen, and inflation explodes, his tenure is increasingly at risk thanks to the shortsighted economic controls and state expropriations of private companies championed by his mentor, whose dreams of creating a Socialist state are now in tatters.
Venezuela’s impoverishment stands in stark contrast to the promises Chávez made when he first ran for president in 1998, when he often claimed that many of the country’s poor had been reduced to eating dog food as a way of demagoguing the previous pro-West, capitalist government. He promised to reduce the country’s income inequality and poverty rate by redistributing the country’s oil wealth. In 2003, after surviving a failed coup and a nationwide strike aimed at forcing him from office, Chávez decreed price and foreign exchange controls in order to stop a run on international reserves. Under his plan, the government decided who would receive dollars, with the intention of delivering them to companies and individuals who qualified. The plan imposed foreign exchange controls and set a fixed exchange rate with the dollar. But the government didn’t provide enough dollars under the exchange controls, inadvertently giving birth to the black market. Later, the government established two additional rates, keeping the initial rate for imports of basic foodstuffs and medicine, two others for certain industries, and another for all other sectors under government control. This year, the government simplified things, establishing just two rates: one for foodstuffs medicine, and one for everything else. But the black market rate is now Venezuela’s de facto exchange rate, reflecting the real costs of goods and services.
Starting around 2005, Chávez also began expropriating businesses by the dozens, claiming that many weren’t producing or operating to his standards. By 2015, over 1,200 private companies had been nationalised, seriously denting local production of food, medicine, and oil – the country’s largest export. Many oil production facilities now stand idle. This is due to a number of factors: low oil prices, a lack of investment, the diversion of oil funds to social programs and government campaigns, and the flight of foreign investors.
Chávez also used Venezuela’s oil wealth to artificially depress prices on over 40 products, largely as a tool to maintain support among the country’s poor. It worked well enough when oil prices were high and the government had the cash to import goods and subsidise consumption. But when oil prices plummeted by over 50 per cent last year, chronic shortages of food, medicine, and spare parts became acute, as the government slashed imports to conserve dollars to make foreign debt payments and avoid default. Now, the government doesn’t have the dollars to sell to importers, who, in turn, can’t buy goods abroad.
“The real problem is that imports have been reduced by 40 per cent this year and by twothirds since 2012,” says David Smilde, a senior fellow at the Washington Office on Latin America. “There is simply not enough food to go around.”
What happened next will not shock you. Venezuela’s economy contracted 8 per cent in 2015 and is expected to dip another 8 per cent this year. And inflation is expected to top 720 per cent this year. With government price controls in place, private companies can’t import the raw materials they need. In May, Coca-Cola halted production at two of its bottling plants due to a sugar shortage. The country’s largest brewer, Cerveceria Polar, has been unable to produce beer for more than a month because it hasn’t received money to import malted barley (they plan to resume later this month, after taking out a loan).
“The government controls access to dollars, and outside banks won’t lend money to Venezuelan producers because of the political instability. They won’t get repaid,” says Vanessa Neumann, president of the New York-based Asymmetrica consulting agency. “And the prices set by the government’s economic interventionism of the past several years mean that producing food is economically unfeasible. The ultimate irony of all this is that it has exploded the social inequality and poverty that brought the Chávistas into power in the first place.”
Many Venezuelans – confronted with long lines, chronic and acute food shortages, and the government’s seeming inability to provide food – long for the good old days. “We didn’t realise how good we had it before Chávez took power,” says