Chavez and the food supply

At the UK’s Telegraph:

Venezuela’s Hugo Chavez tightens state control of food amid rocketing inflation and food shortages
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.
The Venezuelan economy is in shambles,

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

So, having screwed up big time, now Chavez is going to bring production quotas and price controls:

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.

Not that price controls have been effective:

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.

Without a hint of irony, the Telegraph’s caption of Chavez’s photo reads “Hugo Chavez is seeking to ensure that his core support, the poor, can still fill their shopping baskets with food.”

Chavez sees that government intervention doesn’t work, so he implements more government intervention. While this does not make sense from the economics point of view, it further consolidates his power.

Does that sound familiar?

UPDATE
Commenter EMH points out that Chavez is also nationalizing food producers Cargill and Polar. Cargill, the American company,

Cargill, which is privately owned, has been doing business since 1986 in Venezuela, where its operations include oilseed processing, grain and oilseeds trading, animal feed, salt, and financial and risk management.

It has 2,000 employees in 22 locations in Venezuela, according to its Web site.

Make no mistake: it’s all about control.

UPDATE
Shoebox posts about future attractions.

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4 Responses to “Chavez and the food supply”

  1. Beth Donovan Says:

    Our Democrat laden Congress wants to be sure that NAIS is implemented – National Animal Identification System – could require small farmers like myself to microchip my chickens with a gps chip (can’t imagine how I would do that!) and write a report anytime a hen or rooster dies – Most of mine die because of predators like coyotes and hawks – I’m a tiny chicken farmer – they will increase my costs to the point where eggs will have to be over $5 a dozen to break even.

    It’s all about control. They say it is for disease control – that’s bs. (because they also want dogs, cats, etc., tagged that way, too) Most food bourne illnesses come from the plants where animals are killed, not small farmers, but Congress wants to run everything, and with this president, they are further encouraged to do so.

    I may have to go underground with my chickens and eggs!!

  2. E.M.H. Says:

    Fausta, you see that the South American answer to Dear Leader wants to nationalize a couple of food manufacturing companies?

    CNN: Chavez orders nationalization of Cargill

    (*Sigh*) The populace really struck a (pardon the phrase) Faustian bargain when they elected this man years ago. And they’ll be paying for it for many years after he’s gone.

  3. Pat Patterson Says:

    Don’t forget his oil revenue is not based on the international price but what he gets for heavy crude which is currently at $33.50. Maybe he’ll attempt a Leopold Galtieri and invade Guyana in some Great Patriotic War. Of course judging by the abysmal performance of his military in threatening Colombia he might lose because he didn’t realize that the Guyanans are members of the Commwealth and have a defense treaty with the UK.

  4. E.M.H. Says:

    Yep. All about control. You got that right. In spades.

    But let’s remember: He’s democratically elected! (*rolls eyes*)