A case of political supply and demand?

Dan Grech Feb 15, 2007
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A case of political supply and demand?

Dan Grech Feb 15, 2007
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KAI RYSSDAL: Hugo Chavez is broadening his ambitions. The president of Venezuela has already nationalized what he calls strategic parts of the economy.

Earlier this week, the government bought out local subsidiaries of some big American companies. Telecommunications and electricity firms. Now, it’s food. It’s been weeks since most stores have had beef on the shelves. Staples like sugar and rice have been cleared out.

Chavez said yesterday he suspects supermarkets and distribution centers are hoarding supplies rather than sell at the government’s fixed prices. And he threatened to nationalize them, too. From the Marketplace Americas Desk at WLRN, via Caracas, Marketplace’s Dan Grech reports the shortages might be a case of political supply and demand.


DAN GRECH: Before sunrise above the mountains that ring Caracas, Minerva Simosa takes her place in line.

She patiently waits to enter the Mega Mercal, a giant outdoor market set up by the Venezuelan government to sell subsidized food.

MINERVA SIMOSA: The people are here to buy the chicken and milk they can’t find in the store. And for the sugar, of course.

This is the first Mega Mercal in nearly three months. And a food line of this magnitude is the last thing you’d expect to see in one of the world’s most oil-rich nations.

The line wraps around a dirt soccer field, crosses a street, circles a park and ends a mile later with three men in military uniforms holding guns.

Songs praising President Chavez blare on loudspeakers.

[Pro-Chavez songs]

Eight hours later, Simosa’s finally able to buy her ration of food: two frozen chickens, two kilos of sugar and a bag of powdered milk.

The vendors have run out of cooking oil and butter. Still, Simosa’s pleased.

SIMOSA: Yesterday, I bought a chicken in the supermarket, and it cost me $7. Today, I bought two chickens for half that much. As much as you save, it’s worth the wait. These Mega Mercals are the best thing the government can do.

Despite the long wait, Simosa’s a die-hard supporter of Chavez, the man who introduced sweeping socialist reforms to this nation of 26 million people.Along with the Mega Mercals, he pays people to attend school. He opens factories in slums. He offers free health care.

SIMOSA: Thank you from the bottom of my heart to our president, Hugo Rafael Chavez Frias. He’s the only president that has given these benefits to us as a group, not to individuals.

In 2002, Chavez began freezing the prices of basic goods, like beef, sugar and coffee. Since then, Venezuela has seen an overall inflation of 100 percent, the highest rate in the hemisphere.

But because the prices of staples are fixed, the poor — who spend about half their income on food — have been largely insulated from this rampant inflation. Cheap eats go a long way to explain why Chavez has a 70 percent approval rating among the poor.

It also explains the shortages.

Farmers say they can no longer afford to sell beef or sugar or milk at the subsidized prices. Farms are shutting down, or selling their products on the black market.

Part of Chavez’s novel approach is insisting his ministers mix with the masses.Here, back at the Mega Mercal, the Minister of Nourishment, a new cabinet position created by Chavez, holds a press conference. He recognizes the crowd is growing restless. He offers a bureaucratic explanation for the food shortages.

MINISTER OF NOURISHMENT: In reality, there’s a logistical problem in the network of distribution of food. It’s very technical, not worth specifying the problem. But we’ll fix them by next week.

Newspaper reporter Gabriela Iribarren is recording the minister’s remarks. The whole time, she’s eyeing a large packet of sugar near the microphone.As the press conference ends, she asks the minister if she can have the sugar.He says yes.

GABRIELA IRIBARREN: I don’t have any sugar in my house. I always take the sugar after these press conferences. I tell them it’s for my kids and they give it to me.

Next up, Venezuela’s Vice President Jorge Rodriguez makes an appearance. He wades through the crowd. People cheer, touch his arm, call out requests.

The vice president talks briefly with a woman. Then he gestures for his assistant to take down her number.

As Rodriguez presses ahead, the crowd shifts from adulation to anger. Sweat pours down the vice president’s face as he explains to me why he’s braving this crowd.

JORGE RODRIGUEZ: It’s a policy of President Chavez to be in contact with the people, face to face, to listen to their needs and their problems. We do this much more often than in the past.

As prices march implacably upwards, the shortages on price-fixed food will inevitably get worse. And it might take more than a vice presidential visit to placate this swarming crowd.

In Caracas, I’m Dan Grech for Marketplace.


Venezuelan Vice President Jorge Rodriguez wades through the crowd of shoppers.
(Photos by Dan Cancel for Marketplace)


Shoppers flood the Mega Mercal in downtown Caracas.

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