This should end well:
President Hugo Chavez is tightening state control over Venezuela’s food supply, setting quotas for food staples which are to be sold at government-imposed prices.
Venezuela’s public finances are unravelling, with oil prices at $40 a barrel, while the national budget is calculated at $60 a barrel. Inflation is running at over 30 per cent, yet with the new measures Mr Chavez is seeking to ensure that his core support, the poor, can still fill their shopping baskets with food.
“If any industry wants to ride roughshod over the consumers, with a view to getting better dividends, we are going to act,” said Carlos Osorio, the national superintendent of silos and storage. “For the government, access to food is a matter of national security.”
Production quotas and prices have now been set for cooking oil, white rice, sugar, coffee, flour, margarine, pasta, cheeses and tomato sauce.
White rice, the staple for many Venezuelans, can now only be sold at a price of 2.15 bolivares (71p) per kilo. Private companies insist that production of that kilo costs 4.41 bolivares (£1.46) and that government regulations are impossible to fulfil and companies will quickly go broke. Companies that are dedicated to rice production must ensure that 80 per cent of their efforts are dedicated to white rice. The new regulations set production percentages, as companies were rebranding their products to avoid the government controls, like flavouring the rice, as the price restrictions apply only to white rice.
Government price controls on basic goods have been in place, in various forms, since 2003. But the restrictions have forced Venezuela to become increasingly reliant on imports of these products as local farmers will not supply the selected food staples at government prices.
Nationalization appears just around the corner. But hey, history teaches us that no one is better at producing and distributing food than autocratic tyrants, right?