There aren't even that many controls. There are only about 20 products on the price control list despite all the gnashing of teeth you hear. Toilet paper is one of them. The rest are baby food, diapers, personal hygiene products, mineral water and pasteurized fruit juice. You can check this for yourself at the SundeCOP website and click on the red box "Consulto los precios maximos de venta al publico" to see how few items are on the price control list. Or better yet, here's an easier list straight from the Price Control Branch
The controlled price for toilet paper is $8.20(USD) for 12 rolls. Is that so unreasonable? Especially in a country where 60% of the population is very poor and 80% would be classified poor by US standards?
The other place to check for agricultural price controls is the govt website of Gacete Officiel Here's the bulletin for May. I noted with amusement that again, there are few items on it (chicken, powdered milk, cheese, basics what).
My take, as you know is item #2.The business community is still angry that Chavez took oil money to subsidize a livable diet for the poor and selling them food at a discount in special markets in poor neighborhoods. Wealthy food producers and importers, almost all of them tied to the opposition, don't like that so they're trying to raise prices by hoarding. If they can make the government subsidies appear meaningless economically and cause political unrest while they're at it, they're guaranteed cheap labor and huge future profits again.
They've been caught doing this too many times and several times in Venezuela. Before the 2002 coup, they were hoarding all the basic goods too thinking it would get more people on their side when they tried to oust Chavez. They failed miserably. And they've failed every single time. If you really want to know about this subject talk to the Magistrate. He's an expert on it and can give you the whole sordid history. And talk a long look at these charts which explain why the private sector is so pissed off.
Your reasoning that maybe they're just not producing the stuff because there isn't enough profit would make sense if they hadn't been caught hoarding the same items for which there was a shortage. No government, anywhere in the world, can be expected to tolerate that.
And it's not just hoarding, it's also smuggling for profit. Venezuela's subsidized gas, for example, is probably the cheapest in the world. So what did certain people do? They went hog crazy for profit and started smuggling it into Colombia so Chavez had to introduce gas rationing on the border states. They do the same thing with the food too, smuggle it into Colombia for profit, like the US/Canada cigarette smuggling rings.
They're not being asked to produce good without a profit. This is where the Venezuela model got a lot of criticism from Socialists and Communist. Private business can make a profit there. It just can't be obscene. Think of our banks for a good comparison.
Another thing is that only certain items have price controls in Venezuela. Those 'certain items' are basic things people need to live. There are price controls on cars too because car dealers were fixing the prices and flipping them for several times their worth, gouging the consumers again.
Look at this company, it was allowed to produce and sell food in Venezuela. These are the kind of vultures who want the price controls gone. And why? For multimillion dollar salaries, bonuses and stock market speculation. So a CEO can sit in the boardroom and tell his officers he wants a 10% increase in profits next year so they squeeze the consumer dry. Now the shoes on the other foot with the consumers dictating the terms and they don't like it.
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“Initiate the process of expropriation of Cargill, and with that a legal investigation, since what they are doing is a flagrant violation,” Venezuelan President Hugo Chávez declared on national television Wednesday.
Vice Minister of Agriculture and Land, Richard Canán, reported the results of the investigation, which was carried out by Venezuela’s Institute in Defense of People’s Access to Goods and Services (INDEPABIS) at the request of rice producers in the region around the processing plant in Portugesa state.
“Cargil is not even producing one single kilogram of regulated rice, but they do produce 2,400 tons of pre-cooked rice, which is not subject to regulation” said Canán. Also, INDEPABIS found approximately 18,000 tons of non-modified rice stored in the plant’s warehouse.
...
Last Sunday, the government took temporary administrative control of a Polar plant in Guárico state that was also enhancing its rice to avoid price controls. With the support of the workers, the plant is now processing rice that Polar had stored away, and the government is in discussions with the owners about next steps, according to INDEPABIS.
State inspectors found no irregularities at another private rice plant in Guárico state, so the government did not intervene in that plant.
After ordering the Cargill expropriation, Chávez told his ministers to begin inspections of producers of flour, oil, and toilet paper. He said the state “will take decisive measures in favor of the people against those who do not abide by the law.”
...
Cargill produces food and provides agricultural, financial, and industrial services in 67 countries, according to the company website. It reported nearly $4 billion in net earnings in 2008, a 36% increase over the previous year, while the number of people suffering hunger worldwide increased to a record 923 million.
This work is licensed under a Attribution Non-commercial No Derivatives Creative Commons license
http://venezuelanalysis.com/news/4267
These people are not honest Flatulo. They're no more honest than Archer Midland Daniels in the US who now own about 80% of our food supply and keep blaming Mother Nature but never their billions of dollars worth of salaries, bonuses and perks. They cry about price controls, never mentioning that they are making a profit, and never mentioning any illicit activities.
As we drive past the sugar mill belching a large plume of grey smoke, Franco waves his hand out the window at the miles of sugar cane extending in every direction. “How is it possible that we had a shortage of sugar here?” he asks with more than a slight tinge of anger in his voice.
I shrug. “You had a shortage of sugar?”
He looked at me with alarm. “Don’t tell me you didn’t hear about it,” he said, “yes, sugar — and milk and oil. And even, for a time, coffee, believe it or not. All this went to Colombia, and then we had to buy it all back.”
I ask him to explain.
“It happened last year just before the referendum. Polar, Alfonso Rivas y Compañia, Cargill and some other companies related to Purina and others, were sending all this stuff out of the country to be sold at market prices in Colombia. You see, the prices were being controlled here in Venezuela to make food available and affordable to working people. So what happened was these companies sent all this out, truckload after truckload: caravans of all this food, into Colombia. And we had to buy it all back.”
We pass through another alcabala where there is a National Guard truck with an x-ray machine and a conveyor belt attached. We dutifully roll down the tinted windows and turn off the air conditioner. We’re hit with a blast of dry air as we smile at the guards, who smile back, and then wave us through.
The overriding reason the corporations shipped food to Colombia was, of course, profiteering: a liter of milk sold in a transitional socialist economy won’t command the same price as the same liter sold in Colombia’s “free trade” capitalist markets. But there was also a political reason, and that was the referendum of December 2, Chávez and the Bolivarian Revolution’s first electoral defeat. The shortages, engineered by the very same opposition which decried them, then blamed them on Chávez, ironically boosted dissatisfaction sufficiently to defeat the initiatives for the further socialization of the economy. The referendum lost by less than one percentage point.
Franco waves his hand in front of him again. “Chavez is a plainsman and he has a long vision. He’s a great chess player who turns defeats into victories. And so he set up these checkpoints to stop what was really highway robbery by the big corporations, and then he began to nationalize the food industries.”
...
Franco orders a small black espresso and a small espresso with milk, a café marrón. He dumps a packet of sugar in each of the two little plastic cups, the sizes of large thimbles. I ask him if there are still shortages. He laughs.
“Not any more. Not since Chavez started nationalizing the food companies. Lacteos Los Andes, which represents over forty percent of the market in milk and milk products, is now state owned. He also created Pedeval, a PDVSA (Venezuela Petroleum Company) project which buys food from overseas and sells it here in Venezuela at very low prices. Then, to give a little to the capitalists, he also raised the maximum price for milk and suddenly there was milk everywhere. So he used the carrot with one hand, and the stick with the other.”
...
“Look at that. Smart business people know they can do good business with Chavez,” he says. Someone honks at us and quickly passes, the roar of an engine temporarily drowning out Franco’s words. “If they push too hard and disrupt the country with another attempt at a golpe (coup) then he nationalizes them. Otherwise, if they cooperate with the new socialist economy, they win and make their money. Either way he has stopped them at the checkpoints.”
“That may be true, Franco, but then, what makes this a “socialist” economy?” I ask.
To my dismay, Franco takes his eyes off the road to look at me. “Making food, housing and education accessible to all as a top priority. Profit has to be a second priority,” he replies.
Check, mate.
http://www.venezuelanalysis.com/analysis/3580
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