Venezuelan government projects to increase food production

www.vheadline.com Posted: Monday, February 17, 2003 By: Oliver L Campbell

Date: Mon, 17 Feb 2003 10:20:55 -0000 From: Oliver L Campbell oliver@lbcampbell.com To: Editor@VHeadline.com Subject: Projects to increase food production

Dear Editor: I refer to your report of February 13 entitled Venezuelan government to commence food production projects which goes on to state, perhaps with an element of exaggeration, Venezuelan major cities can produce sufficient food to feed their inhabitants.

While any initiative to increase food production in Venezuela, and so save foreign currency reserves, has to be applauded, I have doubts about this solution.  Perhaps a  Venezuelan agronomist would confirm he believes this is, indeed, the best way to boost food production. I am ignorant on farming matters and can only apply some common sense and relate a few of the past difficulties when efforts were made to increase food production in Venezuela.

a) Surely it would be better to cultivate the best arable land available even though this land may not necessarily be close to the impoverished urban areas?

b) Though these projects provide work for those living in the impoverished urban areas, do people there have the necessary farming skills or, indeed, the desire to work as farmers?

c) In the past, there has been a migration from the land to the cities because farm labourers were so poorly paid for what were long hours of hard work in the sun.

d) In the past, the intermediaries, transportistas and wholesalers, have taken a large slice of the margin between the price the farmer gets paid and that charged to the retailers e.g. the supermarket chains.

e) It is a fact that, worldwide, over the last 50 years bargaining power has shifted from the manufacturers/producers to the large retailers so that they dominate the price setting (fixing?) process.  This has been to the detriment of farmers,  particularly the small farmers who have had to defend themselves by forming cooperatives.

f) Also for much of the time it has been cheaper to import many food products, e.g. black beans, than to produce them in Venezuela. This may be due to climatic factors, economies of scale or inefficiencies in the distribution system. (the so-called 'roscas').

If the government’s prime objective is provide employment, then the food production projects in urban areas make some sense.  However, if the main purpose is to provide food at competitive costs, then I have misgivings about its effectiveness since competitive costs are usually associated with large scale farming on good quality arable land.

I do not like to identify problems without proposing solutions, but the only one I can suggest to increase food production in general goes against my free market principles and that is to create some form of price control so that the farmer gets a fairer deal. It then follows the intermediaries and retailers (the supermarkets mainly) have to give up some of their present margins.

The trouble with price controls is that an invisible hand is substituted by an invisible government department which dictates who shall have what. If you do not allow each party to make a reasonable profit, then the whole production chain collapses and that product is no longer produced.

The government’s intention in this case is excellent but will the projects as envisaged really be viable?  Doubtless you have readers with more knowledge of agronomy than I who can either endorse the projects or propose better alternatives for increasing food output.

Oliver L. Campbell oliver@lbcampbell.com