Longtime Caracas bakeries enjoy sweet benefits of dollarization

CARACAS, Dec 1 (Reuters) - After years of struggle, veteran bakeries in Venezuela's capital Caracas are cooking up a variety of delectables, in the latest sign that the country's slight economic boost is reviving some family-owned small businesses.

Numerous old-style bakeries and dessert shops in Venezuela's main cities that struggled two years ago to produce a variety of products due to a scarcity of ingredients, are now offering ever-more baked goods.

Baguettes, rolls and loaves of local and European-style breads fill previously bare bakeries, while multicolored tarts and cakes glisten on shelves, now that once scarce fruits during the worst of Venezuela's crisis are more readily available.

The recovery seen by Venezuela's bakeries and pastry shops, traditional businesses which were among the hardest hit by the country's virtual economic collapse as consumers cut back on luxury goods due to hyperinflation, is yet another indication of the incipient economic recovery.

Since 2019, when President Nicolas Maduro decided to relax foreign currency controls as sanctions impacted oil earnings, Venezuela's economy has benefited from much needed oxygen brought by de facto dollarization.

Dollarization meant freedom from the troughs and peaks of Venezuela's local currency, extra dough for spending in some sectors, and greater ease for importing certain ingredients, like wheat flour.

While bakeries are not yet as prosperous as they were 10 years ago, Andres Kerese and his family - owners of one of Caracas' oldest bakery chains - are seizing the opportunity now afforded by increased use of the dollar.

Production "fell and now it's growing a bit. Customers who stopped making orders are returning," Kerese told Reuters on the terrace of one of his family's bakeries which, in addition to desserts and bread, also offers lunch.

Processing and distribution of wheat flour was under state control for years and supplies were intermittent, leading to lower production, while Venezuelans saw bread rationed.

"Bakeries are seeing improvements because the government is not intervening in flour distribution and the dollarization has been a big help, at least in large cities," said Luis Nunes, director of the country's federation of bakeries, which represents 8,000 businesses.

Venezuela imports wheat flour for processing. While processing of flour fell 10% three years ago, output grew 4.4% between December 2021 and August 2022, according to the Venezuelan chamber of foodstuffs.

While hundreds of bakeries had closed by the nadir of Venezuela's economic collapse, those that struggled are now seeing a slight respite, business owners told Reuters, though improvements are financed via their own funds due to a lack of available loans.

"Clients have asked us to reinvent ourselves, to expand our premises," said Viviane Caloni, who owns a pastry shop in north Caracas, which has recently expanded to include a coffee shop.

"People go out more for a coffee and to buy something sweet," Caloni added.

Despite the county's economic improvement, low salaries remain a hurdle for bakeries looking to grow.

A coffee in a typical bakery costs at least $1.50, while the cheapest bread costs $1. However, in a country where the minimum wage is equivalent to $12 a month, this continues to put cakes and cookies out of reach for many.

Reporting by Mayela Armas. Additional reporting by Keren Torres in Barquisimeto. Writing by Oliver Griffin; Editing by Christian Plumb and Diane Craft

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