Gov’t increases control of food industry

Venezuelan President Hugo Chavez speaks to agricultural workers, May 26. The law reform upholds the principle that ‘the land i

To guarantee access to essential foods amid price inflation and supply shortages in some items, the Venezuelan government recently nationalised a major flour producer, granted low-interest credits to small and medium-sized producers, opened new subsidised food markets, sanctioned price speculators and hoarders, and is in the process of reforming its land reform law.

After months of investigations of the flour and tortilla producer Monaca for allegedly decreasing production during a time of national shortage, government officials said the state would take over all of the company’s operations and facilities.

The state will acquire “a broad structure for the processing, marketing, and distribution” of cereals and related products such as wheat, corn flour, pasta, rice, and oatmeal.

This will be controlled by the state-owned Venezuelan Agricultural Corporation (CVA) with the participation of unions, cooperatives and community councils, the nationalisation order said.

Monaca is a subsidiary of the Mexican multi-national Gruma, which operates in the US, Mexico, Central America, Venezuela, and Europe. It is the world’s largest tortilla and corn flour producer. Gruma is the second largest flour producer in Venezuela, which accounts for 10% of its revenues, a May 14 Reuters article said.

A 2003 Oxfam report said Gruma controlled 70% of the Mexican market and had used this power to more than double flour prices, even as corn and wheat prices dropped,

Gruma was a major beneficiary of the 1994 North American Free Trade Agreement. It is also credited with having stripped the corn tortilla, a traditional Mexican food, of most of its calcium, dietary fibre, and other nutritional values.

The Venezuelan National Assembly is set to pass a reform to its land reform aw that will further facilitate land redistribution.

Since the law was passed in 2001, 2.5 million hectares of idle, privately owned land have been confiscated. The land has either been turned over to small farmers or used for state farms and research laboratories.

The law was one of the causes of a two-day right-wing coup against Chavez in 2002, and the law’s opponents have murdered more than 220 peasant organisers.

The reform will limit the ability of private landowners to contract out the cultivation of their lands to third parties. The law says such contracting allows “evasion of just labor relations” and is remnant of “feudal slave exploitation”.

Such contracting will also be prohibited on public lands and for state-owned companies, except with permission of the National Land Institute (INTI).

Farmers who have worked as tenants on someone else’s land for three years will be prioritised by INTI for land redistribution, particularly if they show they have “a willingness and ability for agricultural production in harmony with the agrarian plans and programs of the national executive”.

The law reform upholds the principle that “the land is for those who work it”, agricultural minister Elias Jaua said. The reform includes provisions that increase the state’s ability to take control of “lands whose use is contrary to the National Plan for Agricultural Production”.

On May 19, President Hugo Chavez presided over a ceremony to grant a total of 2.6 billion bolivars (about $710 million) in low-interest loans to small and medium-sized producers nationwide.

The credits were granted by the Bicentenary Fund, which the government established following a spate of bank nationalisations last year with the aim of re-orienting the financial sector toward production and away from speculation.

Chavez said small and medium-sized businesses that opt to form mixed enterprises with the state and function in line with the plan to build a “socialist” economy will have access to special interest rates of between 2-6%.

They will have a guaranteed supply of imported raw materials at the preferential dollar conversion rate, 2.6 bolivars to the US dollar, while the standard rate is 4.3 bolivars to the dollar.

The government also increased its role in food distribution this week by spending 33 million bolivars (A$9 million) to open 80 new Mercal subsidised food markets and four new “super-Mercals”.

Mobile Mercal markets, which travel from town to town and sell from the backs of delivery trucks in community streets, distribute between 400 and 1500 tons of food daily, including rice, rice, chicken, flour, lentils, oil, sugar, canned goods, and milk.

The Mercal markets have been established nation-wide over the past six years with the aim of combating inflation and making food available to all.

The food ministry said the average savings for consumers in these markets are 46% compared to official regulated prices and 57% compared to prices in the private sector.

Chavez encouraged small and medium-sized businesses that received Bicentenary Fund credits to connect directly with the state-run distributors to eliminate the speculative chain of intermediaries.

“We must create mechanisms of distribution beyond the market”, said Chavez.

Over the past month, the National Institute in Defense of People’s Access to Goods and Services (Indepabis), along with the Bicentenary Women’s Front (an arm of the women’s ministry), and other government officials have carried out inspections of slaughterhouses, meat storage facilities, and butcher shops to root-out price speculation and hoarding.

The inspections led to sanctions against nearly 50 meat businesses.

Anahí Arizmendi, of the Bicentenary Women’s Front, said many butchers had denounced the meat distributors for marking up prices, and said this has also happened with cheese.

“We are proposing that the sellers organise working groups among the meat industry, the Bicentenary Women’s Front, the community councils, and Indepabis to resolve the situation and follow-up on distributors to avoid speculation”, said Arizmendi.

During the credit-granting ceremony, Chavez said private enterprise is welcome in the “21st century socialism” his government is seeking to build, as long as it serves a social purpose and is not monopolistic.

Chavez said his administration, in line with the constitution, accommodates “private property, whenever it serves to produce goods and services that satisfy needs and its surplus does not fall into the hands of a monopoly or contributes to the concentration of capital in few hands, exploiting consumers and workers”.

[Abridged from Venezuela Analysis.]