Hungry Venezuelans Reaping Bounty of Oil Revenue

José Orozco in Caracas, Venezuela
for National Geographic News
June 9, 2008
Part eight of a special series that explores the local faces of the world's worst food crisis in decades.

At first glance, Venezuela's poor seem ill-equipped to handle the global food crisis that has sent the costs of even basic grains skyrocketing in recent months.

The country is strapped with South America's highest annual inflation rate, with food prices rising 36.2 percent in the 12 months before March, according to the Venezuelan central bank.

And the average Venezuelan family now spends 47 percent of its monthly income on food, said Luis Vicente Leon, director of the polling firm Datanalisis.

But under the socialist government of President Hugo Chavez, Venezuelans have access to heavily discounted foods—paid for by record oil revenues—making it possible for them to remain oblivious to the hardships in other poor countries.

"This is very cheap. That's why I put up with the lines," said Petra Blanco as she shopped for subsidized foods at a Mega Mercal in Pinto Salinas, a Caracas slum.

The government runs more than 10,000 Mercal food stores and about 13,000 mercalitos, or smaller shops, that sell subsidized foods to the poor. Chavez's administration also sets the prices for basic goods such as beef, chicken, milk, sugar, and rice.

For the equivalent of about U.S. $24.65, Andrea, who declined to give her last name, bought 3 chickens, 13 pounds (6 kilograms) of beef, 2 bags of pasta, and a package of powdered milk at the Pinto Salinas Mercal.

At a private supermarket, even at regulated prices, she says she could have bought only three packages of milk total for the same amount of money.

Deep Divides

But critics note that cheap subsidized foods are a double-edged sword, a necessity resulting from policies that create sporadic food shortages.

Subsidized foods depend on oil money, so Andrea—a critic of the government's policy—fears their availability will dwindle if oil prices fall from their near-record prices of more than $130 U.S. a barrel.

Her mother, Sofia, on the other hand, charges the private sector with artificially creating shortages to "wage war against Chavez."

Their debate is emblematic of the deep divides in the polarized country, where food has become a political hot potato.

Critics of Chavez charge that the price-fixing is a temporary solution that is hindering the country's long-term prospects to increase food production and reduce shortages.

Government-imposed price controls meant to keep food affordable have forced some milk and beef producers, for example, to choose between selling at a loss and not selling at all, sending many switching to more profitable products.

Food Minister Felix Osorio called the conflict between the government and food producers a "clash of ideologies."

"The private sector seeks profit, and the government seeks the people's well-being," Osorio told National Geographic News during a recent visit to the Pinto Salinas Mega Mercal. "The free market doesn't call the shots—regulation does."

So sporadic shortages of basic foodstuffs have become routine for many of the country's citizens.

Some Venezuelans see the government using its price controls and the private sector using its food shortages as locked in a political struggle, with consumers caught in the middle.

When food shortages became critical in Venezuela last year, for instance, Helen Mercado and Luis Boada visited store after store searching for milk for their three-year-old son.

But many times the young couple had to settle for liquid yogurt, which is more widely available because it is unregulated.

"A Political Problem"

Chavez, however, defended his food policies during an April 19 speech, saying world officials "are now realizing that it isn't the market that's going to solve the human drama, and now they're calling for governments to take measures to regulate the market—[even] the very World Bank."

And not everyone is opposed to a tightly regulated market.

Many Venezuelans support price controls that adjust to the market, which would rein in both price speculation and rigid government regulations.

"There should be price controls, because businesses like to earn a 100 percent profit, and it's the consumer who pays," said Javier Vasquez, a systems analyst shopping at the Excelsior Gama, a large, modern supermarket on Caracas' wealthy east side.

Most people shopping at the Excelsior estimated their food expenses had about doubled in the last year, according to an informal survey.

"The problem is that the government leaves the price controls untouched," Vasquez added. "This is a political problem."

Belkis Romero, who was leaving the Excelsior with $186 worth of food, said she complements her supermarket shopping by buying chicken, beef, and rice at a subsidized Mercal.

"Here, there are two Venezuelas," Romero said. "But there are a lot of people eating and not that much hunger."

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