November 10, 2008 / 5:56 PM / in 9 years

REFILE-Coffee shortages in Venezuela before election

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By Brian Ellsworth

CARACAS, Nov 10 (Reuters) - Coffee has disappeared from many Venezuelan supermarkets, highlighting economic problems ahead of local and regional elections in which politicians allied with President Hugo Chavez may lose key posts.

Venezuelans go to the polls on Nov. 23 to elect state governors and city mayors in a test of support for leftist Chavez a year after he lost his first national vote since winning power in 1998.

Venezuela last year struggled with widespread shortages of staples such as milk and beef, which pollsters say contributed to Chavez’s defeat in a December referendum that would have let him stay in office as long as he kept winning elections.

The government largely eliminated shortages earlier this year. But in recent weeks, shoppers have been unable to find coffee in stores, though cafes still serve it and street vendors are selling it at about twice the regulated price.

Business leaders say the problem is largely driven by strict price controls that the government uses to contain the highest inflation in Latin America. The government blames hoarding by unscrupulous businesses.

Chavez remains popular among Venezuela’s poor majority who value his social programs financed by oil sales.

But polls show Chavez may lose control over some important regional posts on Nov. 23 because many voters are tired of inefficient administration by governors and mayors who have failed to provide basic services like garbage collection.

Venezuela is a coffee-growing nation and has two major producers as neighbors -- Colombia and Brazil. Many of its people dearly love their coffee, drinking several cups of strong espresso every day.

Chavez’s notoriously long television speeches almost always include him downing several cups.

Nelson Moreno, head of the Venezuelan Coffee Industry Association, said roasters are producing less than normal after the government last month hiked the regulated price they must pay farmers for beans without changing the retail price of ground coffee.

“We must have the guarantee of a new regulated price (for ground coffee), because otherwise we cannot guarantee that the industry can cover its costs,” Moreno said.

Unusually heavy rains and a smaller harvest than expected and hoarding by customers have exacerbated the problem.

The government is studying an increase in the regulated price of ground coffee, but is not expected to make it official until a week after the elections.

Editing by Alan Elsner and Saul Hudson

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