Venezuela tackles shortages with controversial food card

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.

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

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.


“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