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  HOME | Opinion (Click here for more)

VenEconomy: You Can Tell What It Is By the “Aroma”

From the Editors of VenEconomy

This Monday, the government “preventively” took charge of the coffee roasting companies Fama de América and Marcelo & Rivero (Café Madrid, El Peńón, and Aroma). Paraphrasing one of Fama de América’s jingles, one can already tell what is behind this Chavista “take over” by the “aroma”: another attack on private property that smells of a confiscation, snatch or robbery Chavista-style that will ruin yet another area of productive endeavor.

Surprisingly enough, this measure has been taken just a few days before Spain’s indulgent foreign minister, Miguel Ángel Moratinos, is to visit Venezuela to sign sizeable business agreements with the Chávez administration and obtain an undertaking that it would review expropriation measures taken against Spanish citizens and their descendents. The two coffee companies affected were founded nearly 100 years ago by Spaniards and both have impeccable business track records in Venezuela.

The production of coffee, an essential product in Venezuelans’ daily diet, is reaching its lowest level in 20 years, with an expected deficit of 200,000 quintales (1 quintal = 46 kg). This deficit is due to the government’s wrongheaded policy of controls that has fixed the price at between Bs.F.405 and Bs.F.470 per quintal, which has had two damaging consequences:

The first is that there is no incentive for growers to gather the coffee crop because the low prices do not compensate the effort involved; and the second is that some farmers prefer to sell the green beans directly outside the country is search of better prices.

For months now, the coffee companies have been warning of the difficulties that they have been experiencing in obtaining the green coffee they need to guarantee supplies to the market. Fama de América, for example, announced that purchases made during the 2008-2009 harvest were down 18.4% from those in 2007-2008 and the lowest in the last five years, so refuting the government’s accusation that its purchases “are more than five times optimum inventory levels.”

Now, with the argument that the coffee companies are presumed to be engaged in “illegal processes of exportation, hoarding, and alleged excessive purchasing of raw material,” the government has taken charge of them for 90 days” (for now) to “find out” what is really happening.

That this is a weak argument goes without saying. If it were true that the companies had committed those offenses, the Executive has an entire network of regulations, controls, and legal instruments for detecting and sanctioning any such irregularities in a timely manner. What is more, the government has an informal watchdog network manned by battalions of trade unionists who are sympathetic to the government and keep an eye on what is happening in private companies.

The fact of the matter is that the government, incapable of creating the State’s own means of production, much less managing them efficiently and competitively, is opting for grabbing productive companies where private entities have invested money and work for decades.

This false maneuver against the coffee companies has been made public thanks to the fact that there are still some independent media that investigate and report the other side of the arbitrary actions and abuses committed by the Executive.

If Diosdado Cabello continues to close down radio and television stations right and left, the only version of the facts available to Venezuelans will be that provided by the disinformation media in the hands of the government. Shamefully, this Monday, the state-owned television station maintained a blanket of silence during the occupation of these companies.

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

Click here to read this in Spanish

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