Venezuela tackles shortages with controversial food card

CARACAS Fri May 2, 2014 1:09pm EDT

Venezuela's President Nicolas Maduro attends a May Day rally with workers in Caracas May 1, 2014. REUTERS/Jorge Silva

Venezuela's President Nicolas Maduro attends a May Day rally with workers in Caracas May 1, 2014.

Credit: Reuters/Jorge Silva

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CARACAS (Reuters) - President Nicolas Maduro is introducing a controversial shopping card intended to combat Venezuela's food shortages but decried by critics as a Cuban-style policy illustrating the failure of his socialist policies.

Maduro, the 51-year-old successor to Hugo Chavez, trumpets the new "Secure Food Supply" card, which will set limits on purchases, as a way to stop unscrupulous shoppers stocking up on

subsidized groceries and reselling them.

Some Venezuelans sell generously-subsidized food from state outlets for handsome profits on the black market or over the border in Colombia.

"If there are shortages, there needs to be rationing to make sure we can all get the products we need," said doctor Yusmery Palacios, 36, in a line at a state-run supermarket in Caracas.

"It's a measure that will help us. A lot of people buy here to resell for more," she said. Others in the queue agreed.

Hardline opposition sympathizers, though, decry the card as a copy of Cuba's ration books - a depressing sign of economic hardship and what they call "Castro-communist" influence in Venezuela.

"No to the Cuban package!" said one opposition leader, Maria Corina Machado, who frequently depicts the Maduro government as being under the influence of Cuban President Raul Castro.

Critics say the card fails to tackle the roots of shortages in Venezuela: a lack of hard currency for imports, dysfunctional ports and absurdly low prices for subsidized goods.

Officials have been coy on details of how the card will limit sales, saying broadly that they want to avoid "constant purchasing" and will install fingerprint machines at checkout counters to keep track of supplies.

Currently, long lines of shoppers line up to buy quotas of subsidized food - 2 kilos of powdered milk, 4 of sugar, 2 of rice, and so on. Uniformed guards check bags on the way out.

But there is little to stop shoppers turning round and simply queuing to buy the same rations over again.

The government is encouraging people to sign up to the new card, which is voluntary, by raffling off state-built homes and new cars assembled with the help of Chinese technology.

FIGHTING CONTRABAND

"These are systems to protect against contraband, so that all of this really does reach the people," Maduro said upon unveiling the card in March. It is adorned in blue, yellow and red - the color's of Venezuela's national flag.

"Each month we'll set aside, I don't know, 500 apartments and maybe 500 vehicles, special bonuses, vacation packages," shouted a euphoric Maduro before a pulsing crowd.

For the next three months, shoppers will provide their personal information and then will receive their cards. The Food Ministry says at least 380,000 people have registered.

Shortages of food and other products have in part motivated three months of protests seeking Maduro's resignation that have left dozens dead.

Critics note this is not the first time the government has tried to slow consumption to improve availability of products.

In the border region, state oil company PDVSA has required drivers to install microchips on their vehicles so it can track and limit the purchases of fuel, which is so heavily subsidized that it can be sold in neighboring Colombia at more than 50 times its purchase price.

But fuel trafficking remains a problem nonetheless.

"The card appears to be a conceptual error: it's not going to the root of the problem," said Gustavo Rojas, director of Polinomics, a pollster with offices in Washington and Caracas.

"The only way to eat is to produce or import, and right now neither of those is functioning correctly," he said, noting Venezuela's annualized inflation rate of near 60 percent and slowing growth.

The late Chavez is credited with vastly improving the availability of food to the poor during his 14-year-rule through subsidized grocery stores.

The network expanded thanks to rising oil revenue and nationalizations of private supermarkets, boosting consumption of protein and helping Venezuelans eat more and better.

But his policies also paved the way for today's food supply problems. Currency controls have restricted dollars available to import wheat, milk and toilet paper.

Stringent price controls often require products to be sold below cost, pushing many merchants to sell unregulated goods.

Unscrupulous entrepreneurs aggravate the problem by hauling subsidized food across the border for a quick profit. At least 40 percent of the food that the government sells in border states leaves the country, mostly for Colombia.

Many don't bother to go that far.

Within blocks of state-run stores, informal vendors resell products for triple what they bought them.

The new food card system nonetheless represents a ray of hope for those stuck in seemingly interminable lines.

"I spend almost seven hours every day in line to buy what I need to work," said Gladis Nunez, 50, who sells traditional grilled "arepa" cornmeal pancakes. "If this reduces the number of people (in line), I welcome the card."

(Writing by Brian Ellsworth; Editing by Kieran Murray)

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Comments (3)
rpd12345 wrote:
—”If there are shortages, there needs to be rationing to make sure we can all get the products we need,” said doctor Yusmery Palacios, 36, in a line at a state-run supermarket in Caracas.

Wow, such logic. Apparently the solution to shortages is to ration what’s left rather than to reverse the issues that _caused_ the shortages in the first place.

I guess if your head hurts from banging it against the wall, the solution is to take an aspirin rather than to stop banging your head against the wall.

May 02, 2014 5:58pm EDT  --  Report as abuse
Food Card to Combat Scarcity Unveiled

By Z.C. Dutka

Santa Elena de Uairén, 19th March 2014 (venezuelanalysis.com)- Workers marched to celebrate the 10 year anniversary of Misión Alimentación on Sunday, Venezuela’s vastly accessible nutritional program, launched by Hugo Chavez in 2003.

During that time the program created more than 22,000 distribution points ranging from supermarket-sized stores to neighborhood bodegas; selling nutritional staples at prices subsidized by up to 80%.

The government has long cited the mission as part of efforts to reduce malnutrition.

According to Venezuela’s National Institute of Nutrition (NIN), child malnutrition in Venezuela was found to have been reduced by 58.5%, from 7.7% to 3.2% in 1990 and 2010, respectively.

“Compared to the 4th Republic [the regime that preceded Chavez], there is plenty of access to nutrition. Now you don’t see hunger in the streets like before,” said Belkys Mogollón, resident of La Guaira, as she stood amongst the congregation of people celebrating in front of the presidential palace, Miraflores.

President Nicolas Maduro met the workers outside of Miraflores, outlining in his speech a development of the program that is meant to combat scarcity.

Scarcity has been pointed to as a source for recent unrest, despite a number of distributing vehicles from Misión Alimentación being burned by student protestors in the states of Carabobo, Táchira and Zulia in the past few weeks.

According to the government, one reason for scarcity is that private companies hoard food in hopes to then sell them for higher prices as demand rises. In the first half of 2013, while opposition candidate Henrique Capriles was campaigning against Nicolas Maduro for presidency, at least 40,000 tons of food was found hidden in different locations across the country. At the time Maduro regularly referred to the hoarding as “economic warfare.”

Another important reason is just how attractive their subsidized prices are for smugglers looking to make a profit. A one kilogram bag of sugar sold through any of Misión Alimentación’s distributors can cost between 2 and 6 bolivars. In Colombia, a bag of Venezuelan sugar can sell for as much as 150 bolivars.

A bag of powdered milk, yet another staple for Venezeulan households, costs around 30 bolivars when sold at its regulated price. In Brazil, its worth 600 bolivars. The price difference makes Venezuela a popular shopping destination for Brazilians and Colombians alike, who, often use the black market rate.

In his address on Sunday, Maduro cited that of the subsidized products sold by the two main distributing organizers, Mercal and Pdval, more than 40% leave the country.

He went on to describe the Food Card, or Ensured Supply Card. The free, non-mandatory bank card will give the user certain benefits, and is primarily meant to combat contraband and price speculation.

According to Maduro, the card represents a marriage between the Mision Alimentación and the Fair Price Law, enabled late last year amid rampant speculation when certain chain stores were found to have marked prices up as much as 1,200%. The card is expected to bring greater efficiency to both initiatives.

Upon mention of the card, members of the opposition were up in arms via Twitter, calling it a “Cuban rationing card” and implying that the biometrics fingerprint census required to receive the card is an imposition on consumer freedom and privacy.

Roberto León Parilli, president of the Consumer Alliance ANAUCO, said “by connecting Mercal, Pdval and Bicentenario [three distributors of subsidized foodstuffs], the control the government employs upon people will only worsen.”

But private supermarkets will also enter the network; and though the official details have not yet been released, all signs point to the card working similarly to a loyalty card. Special deals and benefits will be awarded to members, while nonmembers will still be able to make purchases in the same places.

Details as to what the requirements will be to get a card, and exactly how the system will work are to be released this week.

May 03, 2014 6:50pm EDT  --  Report as abuse
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May 03, 2014 7:00pm EDT  --  Report as abuse
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