May 2, 2008 / 4:49 PM / 11 years ago

Chavez shops to shorten Venezuela food lines

CARACAS, May 2 (Reuters) - Venezuela’s President Hugo Chavez is on a shopping spree to combat sporadic food shortages that have dented his popularity, using record income from oil exports to offset the impact of global food prices.

Chavez’s first election defeat in a December referendum on expanding his powers to push through socialist reforms was blamed in part on anger from his mainly poor supporters after basic products like milk, sugar and eggs became hard to track down in South America’s biggest oil exporting country.

To deal with the crisis, Chavez last month bought one of Venezuela’s largest dairy companies and a chain of refrigerated storage units. He cut red tape on imports and opened a new network of food markets run by the state oil company PDVSA.

National Guard trucks are distributing food to the new markets, helping shorten the long lines for groceries that became customary last year, although products still often run out quickly.

“The queues are not like before. It’s easier to find things now,” said housewife Wilma Rondon, buying at a temporary government market newly opened in a poor Caracas neighborhood.

In his 10th year in office and after a long spell of high popularity, Chavez is keenly aware that he may lose important states and the capital in November elections for mayors and governors if he does not tackle the day-to-day issues affecting his supporters.

Polling firm Datanalisis say Venezuelans’ now consider food shortages their second most serious concern after high crime.

Last year’s shortages were caused by a rapid increase in demand as consumers spent their share of the biggest oil bonanza the country has seen since the 1970s, along with supply chain distortions caused by strict price controls.

Venezuela’s farming sector is small and could not keep up, while poor government planning and arbitrary rules meant international companies like Nestle and Parmalat struggled to get imported milk through ports. The government also blames sabotage and hoarding by business elites opposed to Chavez.

DISTORTIONS

Price controls on many foods encouraged farmers to sell crops in Colombia, where prices are higher. At home, many dairy farms sold milk to cheese makers, because cheese prices are controlled less than liquid milk.

To combat these distortions, Chavez bought dairy company Lacteos Los Andes and diverted milk previously used for yogurt to fresh milk.

“We acquired the plant and put it at the service of the people,” Mauricio Herrera, the president of the newly nationalized company, told Reuters.

As one of the world’s top oil exporters, Venezuela is flush with cash from record crude prices. Although most of the country’s food is imported, the government can blunt the increases in world food prices with subsidies for the poor.

Chavez last week announced higher subsidies for farmers to boost harvests of grains like corn. He is investing in the countryside and aims to make Venezuela a net food exporter, a goal complicated by poor government planning and a strong currency.

The government still has a way to go before it can claim to have completely ended the bottlenecks in food supplies, and some consumers are now complaining that car parts and some types of paper are harder to find.

“It’s not that there are more shortages, but people are more sensitive now,” said Datanalisis director Luis Vicente Leon. (Additional reporting by Enrique Andres Pretel; Writing by Frank Jack Daniel; Editing by Kieran Murray)

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