Oct 5th 2013, by Ryan Mallett-Outtrim – Venezuelanalysis.com
Food products seized from alleged hoarders by the National Guard in June (VTV)
With all the media hype about Venezuela’s food shortages this year, I decided to collate a few frequently asked questions about the food situation here, and set out to answer them.
The New York Times and Bloomberg both describe food scarcity levels as “chronic”. CNN has reported that toilet paper, along with “basic goods and foodstuffs…have been disappearing from store shelves since earlier this year”, while according to USA Today, “[c]ooking oil, milk, chicken and other staples are often in short supply at supermarkets”. These shortages are so bad, that “[a]fter years of economic dysfunction, the country has gotten used to shortages of medicines and basic food items like milk and sugar,” according to the Huffington Post. BBC Radio 4 audiences were informed earlier this month that for Venezuelans, “life is becoming harder and harder”, largely due to these shortages.
So, firstly, are Venezuelans starving?
Short answer: No.
Long answer: 96.2% of Venezuelans eat three to four meals per day, according to a 2008-09 survey by the Central Bank of Venezuela, the National Institute of Statistics, the University of the Andes and the Venezuelan Guayana Corporation. Earlier this year, the United Nations Food and Agriculture Organisation awarded Venezuela for halving hunger within its territory between 1990-1992 and 2010-2012. Therefore, reporting that Venezuela is literally starving might be a little premature.
Are Venezuelans eating more?
Short answer: Yes.
Long answer: Overall, food consumption increased by 80% between 1999 and 2011, according to the government. In 2010, FAO’s representative in Venezuela Alfredo Missair stated that malnutrition persists at around 3.7%. This is lower than the 7.7% recorded in the 1990’s.
How do improvements to the Venezuelan diet compare to those of other developing countries?
Short answer: By global standards, in terms of energy intake (a key measure of hunger) Venezuela has gone from an under performer in the developing world in the 1990’s to an above average consumer in the new century. However, energy consumption is still below the regional average, even though overall malnutrition rates are also below the Latin American average.
Long answer: According to the FAO, Venezuelan dietary energy consumption has risen over the last decade. Between 1995-97 Venezuelans consumed on average 2390 kilocalories (kcal) per day. Between 2000-02 that figure rose to 2420 kcal, and then to 2650 between 2006-8. According to the FAO, the average daily energy consumption developing regions was 2540 between 1995-97- meaning that in the final years of the pre-Chavez era, Venezuelans were consuming below average levels of energy even for the developing world. More interesting, however, is that between 2006-08, the global average for energy consumption in developing regions was 2640 kcal- meaning that energy consumption for Venezuelans has risen faster than the global average for developing regions. However, it’s important to note that during this entire 1995-2008 period, Venezuela has continued to trail behind the Latin American average in terms of energy consumption. However, according to Missair, in 2010 on average 6% of the Latin American population generally suffered malnutrition, while Venezuela’s national average was just 3.7%.
Has the Venezuelan diet improved by any other measures?
Short answer: Sure.
Long answer: The FAO has also recorded that daily protein consumption rose from 63 grams per day between 1990-97 to 68 between 2000-02, and 71 between 2005-07. Increases in fat consumption (66 grams per day in the 1995-07 period, 74 between 2005-07) were also recorded.
Does 21% scarcity mean “that out of 100 goods, 21 are not available”, as this BBC article suggests?
Short answer: Epic fail by BBC.
Long answer: In April, scarcity of consumer goods rose to 21%, according to the central bank’s (BCV) scarcity index. “This means that out of 100 goods, 21 are not available,” according to this BBC article from May. Actually, the BCV’s scarcity index measures the rate that surveyed retailers aren’t stocking specific items, and not every single store tends to lack the same items. For example, inspectors might find that stores A, B, C and D have cooking oil, but store E doesn’t. In this scenario, there is a 20% shortage of cooking oil. That doesn’t mean the entire economy is devoid of cooking oil (for all we know, shop A is overstocked), but rather, that cooking oil hasn’t been distributed evenly. The index therefore is not a measurement of how many different goods are in circulation, but rather, how they are distributed. Now, general index itself is just an average of basic products. Hence, at 21% scarcity, this essentially means that consumers are expected to probably have to visit around five different stores to fulfil their basic needs. In other words, the index tells us how easy it is to find products, not how many products are actually available.
Are shortages getting worse?
Short answer: Not since April.
Long answer: Scarcity levels reached a peak of 21.3% in April, according to the central bank. The following month levels decreased to 20.5%, and in June was 19.3%. Then in July,scarcity rose slightly to 19.4%. Now, the latest figures available from the central bank indicate that scarcity was at 20% in August. In other words, for now scarcity levels basically appear to have plateaued around 19-20%.
Is it “normal” for Venezuelans to spend four hours waiting in line to do their shopping?
Short answer: As far as I can tell, no, but it could happen sometimes I suppose.
Long answer: Despite what BBC Radio 4 viewers have been led to believe, waiting five hours in line at a supermarket is not “normal”. Lines at some particularly popular supermarkets can get long at peak times, and perhaps waiting an hour could be expected. I don’t have any solid evidence to back this claim up beyond first hand experience; mostly consisting of once weekly shopping trips. Four hours isn’t impossible, but anecdotal evidence from myself and others I know here suggest it’s pretty rare. Personally, I have never had to line up to enter a store, and have only waited 30 minutes at the most at the checkout. Maybe in other parts of the country things are different, but four hours every week would be very surprising.
Is rationing a likely solution to the shortages?
Short answer: No.
Long answer: A proposed plan to impose a form of food rationing was discussed in Zulia state earlier this year. It was widely reported that rationing would be implemented in June. It wasn’t. The proposal was not only staunchly opposed by the opposition, but also condemned by President Nicolas Maduro, who ordered its suspension just days before it was slated to be implemented. In the end, even the governor of Zulia ended up opposing the idea. In other words, rationing schemes like the Zulia proposal have very little political support, and this was basically a stillborn.
Is a lack of domestic productivity to blame for these shortages?
Short answer: I don’t know.
Long answer: FAO statistics indicate that domestic agricultural output slumped in the first years of the Chavez administration, but started to pick up again in 2004. By 2005, the production of food crops had surpassed the 2001 peak, and continued to rise until 2007. After that, output dipped yet again. The latest figures indicate that between 2010-2011, production improved marginally. According to government sources, agricultural output again rose in 2012, and between 70-80% of basic foods are now produced domestically. So, how does this relate to scarcity? Well, here is a graph plotting scarcity from July 2009 (when the index started) to July 2013:
Now, here are the average levels of scarcity for 2009-2011 compared to agricultural output (2004-06 output=100 units) of the same period (latest stats from the World Bank I could find):
|Year||Average Scarcity Index||Food Production Index|
Or, in graph form:
So what does this tell us about how agricultural output affects scarcity levels? Basically nothing. It shows that both agricultural output and scarcity were lower in 2010 than 2009, and both rose in 2011. In other words, the evidence indicates that less domestically produced food means less domestic scarcity. This is completely counter intuitive, and likely due to the fact that a complex issue has been boiled down to two variables, and I was only able to plot data from a three year period. There is therefore no reason to view this as anything more than an awkward coincidence.
So, what are some other variables that could affect scarcity? Well, if we re-examine the BCV graph of scarcity (Indicador de Escasez) there are pretty obvious seasonal variations, particularly in 2010 and 2012. However, scarcity appears to go completely wild between October and December, peaking at the end of the year. Then, they reach their all time peak in April 2013. A little political context: Chavez was re-elected in October, headed to Cuba in December, and new presidential elections were called for April 2013. Now, just under half of Venezuela’s basic food basket are produced by Polar– a company with a long history of bad blood with the government.
So, is Polar to blame?
Short answer: Maybe, maybe not.
Long answer: The government certainly seems to think so. However, one variable we haven’t touched on yet is inflation. Below is a BCV graph of price rises from August 2012 to August 2013:
Now, let’s look again at their scarcity graph:
There is some obvious correlation between shortages and inflation. Which, of course, makes pretty much perfect sense.
Are the shortages related to domestic productivity, corporate opposition to the government and inflation?
Short answer: It’s complicated.
Long answer: By now it should be evident that the shortages are a multifaceted phenomenon, with numerous possible explanations. The policy implications of this are that resolving the shortages requires a wide range of actions on behalf of the government. Simply raising domestic productivity probably won’t solve the problem if relations with domestic businesses like Polar are poor, and inflation makes hoarding look appealing for both economic and political reasons.
So, is the government taking a multifaceted approach to addressing the shortages?
Short answer: Yes.
Long answer: So far this year, the Maduro administration has increased imports of sensitive goods, tried to streamline access to foreign currency for businesses, raised price controls,reduced taxes and raised subsidies for farmers, cracked down on speculators and hoarders, tried to improve relations with businesses like Polar, is temporarily occupying companies that the government says aren’t doing the right thing and moved to reform