Food Shortages in Venezuela

This post was originally drafted in October, 2009.


My travels haven’t taken me to Venezuela in a number of years, yet I remain involved in business activities that include this Andean nation. Recently I was able to spend some time in California and Colombia with folks from that country, and from its neighbor, Colombia. Naturally, our focus was on doing business, dealing with barriers created by the Chavez government in Venezuela, and building our ability to service those sectors still semi-functional in that country.
Anecdotally, here are some of the issues and problems that, while well documented in the press, simply amaze me, and generate simple questions, like “why”?

Thirty eggs today cost about US$3.50 in Colombia. In Venezuela, if you can get them, those same 30 eggs will cost US$20.00. Why?! Supply (or lack thereof) and demand (plenty of).
Venezuelans who travel abroad and buy food stuffs to carry home, (canned or dried goods, etc.) will be warned by the airlines prior to flying from the USA to return to Venezuela to reduce or eliminate the types and amounts of food they are carrying, as the authorities will confiscate them. Why?! People are hungry and Venezuela cannot produce enough for its population today.

Businesses that do legitimate transactions and obey all the protocols and regulations, in order to win and complete their contracts can find at the last minute, the Venezuelan government will “award” these contracts to investor nations, such as China, in the ultimate quid pro quo for hard currency investments from Sovereign Investment funds, which Venezuela seeks for political reasons, mostly. Even huge multinationals with decades of experience and commitment to doing business in Venezuela are left out to dry in these kinds of situations. Why?! Could it be politics?
Employees of major multinational firms in the computer industry are leaving the employ of these firms, when their requests to be transferred out of Venezuela are not forthcoming. No need to ask why, under the circumstances.

Not to beat a dead horse, but it’s clear that Venezuela, for all its heralded oil wealth is simply unable or unwilling to produce or import sufficient food for its own population. Further, in the words of a Colombian colleague, who has consistently and frequently traveled to Caracas over a thirty-year period, the situation has gone from bad to worse to far worse in the past several years. He refers to all aspects of the city and its environs, as well as crime rates, water and electricity shortages, and so forth. When it comes to doing business, what used to be a “process” to repatriate US dollars from the Bolivars earned locally, has now become an impossibility. You may be a millionaire in Bolivars, but you cannot pay your bills to vendors/partners/suppliers who request hard currency (US dollar, Euro, etc.) payment. Only those willing to ship dollars in suitcases surreptitiously can get their bills paid, it seems in today’s Venezuela.

As one who has specialized in Latin American business for nearly 30 years, this is a sad reality, and one that surely will have to change some day, if the Venezuelans who seek a better country have any hope for the prosperity and productivity that exists today in neighboring Colombia. Why?! I suppose that politics trumps common sense and supply and demand economics. Go figure.

Thanks for reading.

©Daniel A. Cabrera, TopExec.org, All rights reserved, 2010.