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  HOME | Venezuela (Click here for more Venezuela news)

VenEconomy: The Goal of Venezuela’s Maduro is Not Only Getting Polar Out of the Way

From the Editors of VenEconomy

The so-called "prophets of disaster" are proving they were right all this time. Both the economy and the country itself are headed toward disaster.

According to unofficial data, the economy contracted 6% during the first quarter and 7% during the second quarter, while inflation may reach 80% during this first half of 2015 and 132% in the 12 months that ended in June. The international reserves of the Central Bank of Venezuela (BCV) have reached their lowest level in 13 years, while state-run oil company PDVSA is not generating enough dollars to cover the basic needs of the economy. The scarcity level has hit 60% according to the latest unofficial reports.

The most serious thing about everything is that any of this is going to change in the near future, quite the contrary.

That evidence comes from realities reported by productive sectors and companies in particular. Here are a few cases that are heavily affecting the daily diet of Venezuelans.

In early July, the Flour Workers’ Federation (Fetraharina) reported that inventories of bread wheat were going to last until the end of the month, and with it was foreseen a decline in the already curtailed production of bread, pasta and crackers/cookies. The situation was so critical that several companies had already brought their operations to a halt due to the lack of durum wheat to make pasta, "one of the lowest-cost products that make up the basic food basket." It is still unknown whether the Venezuelan government has moved a finger to solve the crisis of this sector as July comes to a close.

Rice manufacturers are on tenterhooks as well. By July 16, the Venezuelan Rice Millers Association reported that inventories of paddy rice available for threshing, or the inventory that the industry is depending on, were going to last seven days. Thirteen days have passed already, and since there is no information that the supplies issue was finally resolved, it should be assumed that those inventories are all that is left of rice in the country.

Also affected was the production of soy oil, an essential product for the manufacturing of mayonnaise and the dairy sector. Regarding the latter, the National Federation of Cattle Ranchers (Fedenaga) insists on the fact that the nation has an installed capacity to ramp up its milk production by 40% in the short term. In order to achieve this goal, it is only necessary to implement a comprehensive plan for the extraction of the oil and the production of protein, which is the fundamental basis of the balanced food for animal consumption. But the Government is still turning a deaf ear to that kind of reasoning.

The meat industry is another with its back against the wall. Regulated prices below real costs, a national production that only meets one-third of the local demand, the lack of foreign currency for the required imports, and the siege from governmental bodies to demand the compliance with legal regulations that are out of step with reality, are only a few of the many issues that have made the supplies of meat and chicken nearly disappear from butcher shops, including the State’s own food retailers such as Mercal and PDVAL.

But to Nicolás Maduro it seems that any of this is happening, as he persists on launching Empresas Polar, the nation’s largest foodmaker/brewer and a great role model to follow for its extraordinary managerial performance, a privately-run company that serves as a mirror to see how deficient, unproductive and corrupt the performance of the Government may turn out, a deadly blow.

Late on Wednesday night, government officials went to the industrial zone of La Yaguara in west Caracas to notify the expropriation of warehouses belonging to companies such as PepsiCo, Alimentos Polar, Cargill, Nestlé and Zara, among others, allegedly for the construction of new buildings of the Government’s social program known as Gran Misión Vivienda Venezuela (GMVV). Buildings where the own Government has conducted searches through the so-called "Operation Liberation and Protection of the People" security plan for the high levels of criminality and violence seen there.

The most direct effects of this economic catastrophe come to the population in the form of an income that doesn’t cover their most basic needs due to the excessive increase in prices of all goods and services; as much as the appalling reality of not finding the foodstuff, products and assets indispensable for their survival.

VenEconomy has been a leading provider of consultancy on financial, political and economic data in Venezuela since 1982.

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