VENEZUELA EXPORTS FOOD EVEN AS ITS PEOPLE GO HUNGRY
President says the goal is to generate ‘euros, yuan and cryptocurrencies,’ while citizens are left malnourished
Shrimp farming is booming in the tiny Venezuelan city of Maracaibo, but little of the shellfish is destined for tables in this malnourished nation.
About 90 per cent of this shrimp is headed for Europe and Asia – with the blessing of President Nicolas Maduro.
Venezuela’s leader has lauded food exports as a way to raise hard currency to stabilise an economy in crisis. And he is paving the way for more foreign sales. His administration has loosened restrictions to allow more production to go abroad, 10 food industry entrepreneurs and executives say.
In addition to seafood, Venezuelan cheese, avocados, citrus and breakfast cereal are finding international buyers.
These new foreign sales are tiny, with most companies billing less than $1 million (Dh3.67m) per year. Venezuela remains almost entirely dependent on oil exports, which amounted to $29bn last year.
Still, the numbers signal a shift for a government that has long blamed the private sector for shortages of basic goods. Mr Maduro and his predecessor, Hugo Chavez, for years accused food companies of hoarding and profiteering. Business leaders say empty shelves were the result of state policies such as price and currency controls and the nationalisation of farms and factories.
Since 2017, 140 Venezuelan businesses have begun exporting for the first time, half of them selling food products, according to data provided by US advisory company Import Genius, which collects customs data for the import-export industry.
Some veteran exporters, meanwhile, are leaning more heavily than ever on foreign sales as Venezuela’s currency has collapsed. Fernando Villamizar, the head of a Venezuelan shrimp industry association, says the withering of consumer spending power at home has forced producers to look abroad for growth.
On a recent morning at a facility owned by a member of the trade group, dozens of workers in baggy smocks, plastic gloves and face masks cleaned shellfish and put them in boxes to be frozen. An order that day was bound for France. The plant also ships to Spain and Vietnam.
“We have to sell outside the country” to survive, Mr Villamizar says.
Venezuelan companies sold $81m worth of shrimp abroad last year, up from $54m in 2016, making it the country’s fourth-largest non-oil export, according to figures from the Venezuelan Association of Exporters. Mr Maduro’s enthusiasm for non-oil exports comes as US sanctions have hurt Venezuela’s petroleum sales. To earn hard currency, his government is scrambling for alternatives.
In July, Mr Maduro toured a factory outside Caracas that ships chocolate to Japan, television cameras in tow. He says the goal of these and other exports was to generate “euros, roubles, yuan and cryptocurrencies”.
Food producers looking to export need to obtain a variety of government permits. Under Mr Chavez, the state frequently denied those permissions, delayed them or never acted on them, according to food industry entrepreneurs and executives. They say Mr Maduro’s administration is now granting more permits, allowing them room to manoeuvre.
The Information Ministry did not respond to requests for comment on Mr Maduro’s exports strategy.
The government this year has also largely given up controlling prices, three of the food industry executives say. More goods have returned to Venezuelan stores.
But even with more products available, Venezuela’s hyperinflation means few can afford to buy. Compared to five years ago, the daily calories now consumed by the average citizen have fallen 56 per cent to 1,600 calories, according to Citizenry in Action based in Caracas, a nutrition-focused charity organisation. That is well below the 2,000 to 2,500 calories per day recommended by the World Health Organisation. Millions depend on government food handouts and subsidised staples.
Lack of demand has spurred two large Venezuelan food companies – Empresas Polar and rival General de Alimentos Nisa, or Genica – to export products that until now had only been sold in Venezuela.
The two companies last year exported a combined $59,000 worth of merchandise, mainly to Argentina and Chile.
Genica says it was entering new markets, but would not elaborate. Polar did not respond to requests for comment.
The Venezuelan unit of another major company, Nestle, as of June had exported 18 tonnes of instant cereal worth $18,600 to the United States, according to port records.
Convenience foods are now beyond the reach of Venezuelan shoppers such as Doris Molina, 28, an accountant.
“I don’t give my son cereal anymore because it’s so expensive,” she says, walking with her four-year-old at a Caracas mall. The local price of Nestle’s instant cereal has increased around 3,400 per cent since last year.
Nestle said in a statement that its exports generate foreign exchange it needs to acquire raw materials, and that these sales comply with Venezuelan law.
Such sales do not violate US sanctions, which forbid American companies from doing business with Venezuela’s government or state-run companies such as oil giant Petroleos de Venezuela.
Venezuela’s private sector companies are free to sell to US buyers.
Attorney Daniel Sanchez opened a fish farm in central Venezuela three years ago to raise tilapia, which is largely unknown in Venezuela. He has buyers in Colombia and is eyeing the US.
Showing off outdoor tanks teaming with fish, Mr Sanchez says he sells tilapia for $2 a kilogram. That is the equivalent of more than a week’s pay for Venezuelans earning the minimum wage.
“The idea is to produce for export,” Mr Sanchez says.
Ramon Goyo, head of the Venezuela Association of Exporters, says a new company joins his trade group almost weekly to seek advice on how to sell abroad.
“They’re looking for hope,” he says. “There’s no [way to make it] in Venezuela’s hyperinflation. There’s no spending power.”
Exports by Venezuela’s private sector companies increased by 26 per cent in the first quarter of the year versus the same period a year ago, even as the economy contracted by 27 per cent, according to the most recent central bank statistics.
Despite Mr Maduro’s public praise of exporters and loosening of export restrictions, sources say his government still does not make it easy.
They say required permits still can be inexplicably denied from one month to the next, while the export of staples such as corn flour and rice remain prohibited.
Businesses say cash-strapped city and state governments have hiked taxes aimed at exporters, while state-run ports have raised fees.
Local officials in Maracaibo, Venezuela’s second-largest city, have asked exporters for bribes, according to people who said they have been asked for such payments.
State port agency Bolipuertos did not respond to a request for comment. The city of Maracaibo and the state of Zulia, where Maracaibo is located, did not answer emails seeking comment.
Some companies have snagged foreign customers, only to lose them to the vagaries of Venezuela’s precarious business climate.
Fruit processor Venezolana de Frutas, known as Venfruca, three years ago began exporting orange and passion fruit pulp to the Netherlands after Venezuelan demand slumped. The Dutch sales quickly became a crucial source of revenue, according to manager Karolis Laguna, who says the company has sent 49 container-loads to Europe since 2016.
But Venfruca this year has struggled to find enough fruit. The Venezuelan farmers it buys from have also figured out exports are profitable; they are increasingly selling in neighbouring Colombia, Ms Laguna says. An outbreak of mould in Venezuela’s orchards has worsened the shortage, she says.
“We have purchase orders open because we don’t have raw materials,” Ms Laguna says. She said frequent blackouts at Venfruca’s facility in the western Venezuelan city of Barquisimeto have not helped.
Dairy company Bufalinda began selling its mozzarella cheese – made from water buffalo milk – in Florida last year out of an “urgent” need to shore up its finances, said Alberto Duhau, founder of the eastern Venezuela company .
He said his air freight costs soared 60 per cent this year after US sanctions blocked direct flights between Venezuela and the US.
Still, Mr Duhau says his US sales are profitable and he hopes to keep expanding there.
“This is an endurance race,” Mr Duhau says. “You can only stay in it if you have a big tank of oxygen.”