Originally published August 7 2015
Food seizures begin: Venezuela farmers ordered to turn over their food to the government
by Daniel Barker
(NaturalNews) As Venezuela's economy continues to worsen -- its currency having entered "free fall mode," according to the Financial Times -- the desperate Maduro government has taken the extreme measure of nationalizing the nation's food industry.
Venezuelan farmers and food producers are now required to sell anywhere from 30 percent to 100 percent of their products to state-owned stores. The order covers staple foods such as rice, milk, oil, sugar and flour.
Shortages and long lines in stores have become common since Venezuela's economy began sliding into inflation -- a situation that placed them at the top of the list in the world for inflation in 2014. The official inflation rate was 65 percent last year, and in the last month the currency has lost another 43 percent of its value. Oil prices once again have dropped, causing further strain on Venezuela's struggling economy.
The recent free fall of the country's currency -- the bolivar -- is evidence, according to FT.com, of "the growing inability of Nicolas Maduro, Venezuela's president, to stabilise the country's fast deteriorating economy."
Maduro's Leftist government has attempted to cover its debts by printing money, a move which has pushed the country towards a state of hyperinflation, according to leading economists. Venezuela's money supply has increased 85 percent in the last year, while the currency continues to devalue. The black market value of the bolivar has nearly reached the 700 to one dollar mark -- a figure roughly one-hundredth of the official government rate of 6.3 bolivars to the dollar.
Many observers believe that the move to nationalize the food supply will only worsen the situation, especially for Venezuela's lower income citizens.
Pablo Baraybar, president of the Venezuelan Food Industry Chamber, says the order is "illogical"
and will harm consumers:
Taking products from the supermarkets and shops to hand them over to the state network doesn't help in any way. And problems like speculating will only get worse, because the foods will be concentrated precisely in the areas where the resellers go.
Speculation and exploitationThe "speculating" that Baraybar refers to is the widespread practice of private retailers in Venezuela purchasing and hoarding cheap food products from the state-owned markets for resale at greatly inflated prices in the private stores.
The speculators, nicknamed "bachaqueros" (giant ants), buy goods from the three state-owned store chains, then resell them at a profit.
The nationalization will also lead to even longer lines in the markets, according to Baraybar, because "goods will be available in fewer stores."
From the Telegraph.com:
The state owns 7,245 stores, compared to more than 113,000 in private hands. Mr Baraybar said that many of the private shops were in densely-populated areas, meaning that people will now be forced to make longer journeys to the state stores.
Solution: increased production, not nationalizationBaraybar says that the Venezuelan Food Industry Chamber was not informed about the order and has called for a meeting with the government to discuss the plan. He says that the move "does absolutely nothing to help with the shortages" and that increased national production is the solution.
For years now, Venezuela has exercised strict price controls on many basic goods in an effort to keep them affordable for the country's poor, but manufacturers claim that high production costs make it impossible to for them to operate, leading to further shortages.
Meanwhile, the government accuses the producers of greedy speculation and trying to undermine the revolution.
The socialist model has proven to be disastrous to Venezuela's economy, as it has in other countries which opted for the same approach. Simply taking over the private sector will never be a formula for economic success.
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