The price of unroasted coffee beans doubled overnight
Posted on 01/11/2006 3:56:29 AM PST by alnitak
President Hugo Chavez's policy of keeping a tight control on food retail prices while doubling the price of raw coffee beans back in December may have backfired.
For at least a week, there has been no roasted coffee available on the shelves of Venezuelan supermarkets as wholesalers and coffee producers have been withholding their coffee from sale.
Since 2003, President Chavez has maintained a strict price regime on some basic foods like coffee, beans, sugar and powdered milk.
But this measure designed to curb inflation has alienated Venezuela's coffee producers who say their profit margins have been reduced to nothing.
Ongoing talks
Coffee farmers have seen a 100% increase in the state-controlled price of raw coffee.
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The price of unroasted coffee beans doubled overnight
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However, the government has so far been reluctant to increase retail prices to a level acceptable to coffee roasters and traders.
The reaction by coffee companies has been to hoard tens of thousands of tonnes of coffee in warehouses in the hope that the government would eventually announce fair prices.
"You can't blame us for keeping the coffee to ourselves for the moment," says Eduardo Bianco, a senior executive at Cafe Madrid, Venezuela's largest coffee producer.
"Would you sell your products on the open market if you were sure you were going to make a loss?"
Government minister and coffee executives have been locked in long talks to try to resolve the deadlock.
Some industry insiders say a compromise is imminent, others are more cautious.
Nothing left
While the coffee barons were in crisis talks with the government, consumers in Venezuela were becoming frustrated.
 Telecoms engineer Rodriguez has given up searching for coffee
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"I've been trying to buy filter coffee since Christmas," says Marcel Rodriguez, a 52 year-old telecoms engineer.
"But every single supermarket here in Caracas seems to have sold out. I've now given up."
Venezuela's leftwing leader has authorised the use of the National Guard to "find every last kilogram of coffee" being stockpiled by coffee roasters.
He even raised the prospect of nationalising the industry as a last resort.
"As far as the law is concerned, we're absolutely within our rights to seize coffee which is deliberately being withheld from sale," insists Samuel Ruh, a government appointed monitor of consumer rights.
"In fact, we have already carried out several successful raids at premises illegally holding thousands of tonnes of coffee."
Yet several food stores in Venezuela's capital city Caracas say the coffee raids are not addressing the fact that shops are also running low on sugar, maize, powdered milk and beans.
Store managers insist they are not being supplied with new stock from wholesalers and importers, who were also complaining that the prices set by the government are too low.
Running short
Three days ago, street sellers working in the country's black market were still able to provide the roasted coffee that the supermarkets were not stocking.
 Cafeteria owner Acosta is running out of coffee
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However, even they have since admitted defeat.
"I'm sorry, we have sold out of all the coffee," says Marcos Hernandez who runs a street stall in La Vega, a poor area in the west of Caracas.
"A lot of people who failed to get something at the supermarkets have come to see me, and now I too have nothing left."
Some owners of street cafes in Caracas say they would run out of coffee within days if the supply chain does not get back to normal quickly.
"I have ten kilograms of filter coffee left," shrugs Carlos Acosta who runs a small bakery and cafeteria in Caracas.
"I don't know what will happen. My suppliers say at the moment they can't help."
Unhappy voters
All of the trouble in the food industry comes at a bad time for the socialist government of Venezuela.
This year is a presidential election year in Venezuela, and although opinion polls suggest President Chavez enjoys 60% public support, problems in the food supply chain could dent his popularity in the long run.
His government's woes are compounded by massive structural problems of a key road bridge linking the capital city, Caracas, to Venezuela's main international airport.
The other day, President Chavez admitted that attempts by engineers to save the bridge from collapse had failed.
Tens of thousands of motorists now face misery as they try to negotiate a bumpy road from and to Caracas.
Trucks carrying goods from the airport now face a four-hour journey to the shops of the capital city, whereas the old route via the bridge took only 90 minutes.
A new bridge will not be ready before the year 2010 according to government estimates.
1. Massive government interference in private enterprise.
2. People react to the interference in a rational manner by not selling coffee.
3. Market collapses.
4. Government responds with threats (nationalisation, sequestration)
5. The industry enters long term decline.
Hopefully we see some cracks forming in this tinpot dictator.
"Unusual to see such a story on the BBC, considering it is a complete slam-dunk condemnation of socialism."
Maybe they are concerned about their coffee supply?
It's a sad indictment of human nature that the lesson has to be learned over and over again.
"You can't get good Chinese takeout in China, and Cuban cigars are rationed in Cuba. That's all you need to know about Communism."
Wish I did, that's a great quote!
Cheers,
OLA
The socialist American dominant media will not report this because it shows the effects of socialism.
P.J. O'Rourke
No Coffee! That's enough to start a revolution! If that happened here, people would die, literally.
Looks ike the Zimbobwe Syndrome to me.
1991 - from Parliament of Whores
Communism just doesn't work. I personally am very accident prone but I seldom cripple myself the same way twice. Mankind (and girlkind) must learn from their errors.
Shocking... You mean that the theory of supply and demand actually works!!
The ignorati in every country are always pleased to hear some tinhorn dictator like Chavez tell them that they can have something for nothing. They simply have to take them from the people who create the wealth. As long as there are appreciable numbers of very stupid people, Marxists like Chavez will have power.
"Chavez enjoys 60% public support, problems in the food supply chain could dent his popularity in the long run."
Dictators don't need popularity.
it's just a preview of coming attractions
Chavez is following in Mugabe's footsteps. I'll wager a dollar that food will be used as a political weapon over the next year or two. Chavez will also get 99% of the vote, too. If his Bolivar revolution continues to spread, we will need a South American death watch.
Azlan Shrugged. :)
I'd burn it before I'd let them get it.
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