Shortages in Venezuela

Shortages leave shelves empty in this Venezuelan store.

Shortages in Venezuela have been prevalent following the enactment of price controls and other policies during the economic policy of the Hugo Chávez government. Under the economic policy of the Nicolás Maduro government, greater shortages occurred due to the Venezuelan government's policy of withholding United States dollars from importers with price controls. Shortages occur in regulated products, such as milk, various types of meat, chicken, coffee, rice, oil, precooked flour, butter prices; and also basic necessities like toilet paper, personal hygiene products and medicine. As a result of the shortages, Venezuelans must search for food, wait in lines for hours and sometimes settle without having certain products.

History

Graph showing the food scarcity rate in Venezuela.
Sources: Central Bank of Venezuela, Americas Society/Council of the Americas

External image
Contrasting satellite images of Puerto Cabello in February 2012 and June 2015, showing import shortages.

Since the 1990s, food production in Venezuela has continuously dropped, with the Bolivarian government beginning to import food using the country's then-large oil profits. In 2003, the government created CADIVI (now CENCOEX), a currency control board charged with handling foreign exchange procedures in order to control capital flight by placing currency limits on individuals. Such currency controls have been determined to be the cause of shortages according to many economists and other experts. However, the Venezuelan government blamed other entities for shortages, such as the CIA and the smugglers, and has stated that an "economic war" had been declared on Venezuela.

Before the Nicolas Maduro presidency, Venezuela faced occasional shortages due to high inflation and financial inefficiencies of the government. An increase in shortages began to occur in 2005, with 5% of items being unavailable according to the Central Bank of Venezuela. In January 2008, 24.7% of goods were reported to not be available in Venezuela, with the scarcity of goods remaining high until May 2008, when there was a shortage of 16.3% of goods. However, shortages increased again in January 2012 to nearly the same rate as in 2008. Shortage rates continued to increase, and reached a new record high of 28% in February 2014. Venezuela has stopped reporting its shortage data after the rate stood at 28%. In January 2015, the hashtag AnaquelesVaciosEnVenezuela or EmptyShelvesInVenezuela was the number one trending topic on Twitter in Venezuela for two days, with Venezuelans posting pictures of empty store shelves around the country.

A video with English subtitles produced for El Tiempo explaining the shortages.

In August 2015, American private intelligence agency company Stratfor used two satellite images of Puerto Cabello, Venezuela's main port of imported goods, to show how severe shortages became in Venezuela. One image from February 2012 showed the ports full of shipping containers when the Venezuelan government's spending was near a historic high for the 2012 Venezuela presidential election. A second image from June 2015 shows the port with much fewer containers, since the Venezuelan government could no longer afford to import goods, as oil revenues dropped. At the end of 2015, it was estimated that there was a shortage of over 75% of goods in Venezuela.

Into 2016, experts feared that Venezuela was possibly entering a period of famine, with President Maduro encouraging Venezuelans to cultivate their own food. In January 2016, it was estimated, that the scarcity rate of food was between 50% and 80%. The newly-elected National Assembly, primarily composed of opposition delegates, "declared a national food crisis" a month later in February 2016. Many Venezuelans then began to suffer from shortages of common utilities, such as electricity and water due to the prolonged period of mishandling and corruption under the Maduro government.

Potential causes

Currency and price controls

Blue line represents implied value of VEF compared to USD. The red line represents what the Venezuelan government officially rates the VEF.
*March/April 2013 data is missing
Sources: Banco Central de Venezuela, Dolar Paralelo, Federal Reserve Bank, International Monetary Fund.

In the first few years of Chavez's office, his newly created social programs required large payments in order to make the desired changes. On February 5, 2003, the government created CADIVI, a currency control board charged with handling foreign exchange procedures. Its creation was to control capital flight by placing limits on individuals and only offering them so much of a foreign currency. The Chávez administration also enacted agricultural measures that caused food imports to rise dramatically, and such agricultural mainstays, such as beef, rice, and milk, slowing in domestic production. With Venezuela's reliance on imports and its lack of having dollars to pay for such imports, shortages resulted.

With such limits to foreign currency, a currency black market was created since Venezuelan merchants relied on the import of goods that require payments with reliable foreign currencies. As Venezuela printed more money for their social programs, the bolívar continued to devalue for Venezuelan citizens and merchants since the government held the majority of the more reliable currencies. Since merchants could only receive so much necessary foreign currency from the Venezuelan government, they had to resort to the black market, which in turn raises the merchant's prices on consumers. The high rates in the black market make it difficult for businesses to purchase necessary goods or earn profits since the government often forces these businesses to make price cuts, such as Venezuelan McDonald's franchises offering a Big Mac meal for $10.90 in January 2014, though only making $1 at the black market rate needed for imports. Since businesses made low profits, this led to shortages since they cannot afford to import or produce the goods that Venezuela is reliant on.

With the short supply of foreign currencies and Venezuela's reliance on imports, debt is created. Without settling the outstanding debt, Venezuela could also not import materials necessary for domestic production. Without such imports, more shortages could be created since there would be a larger lack of production as well.

Expropriations

According to economist Ángel Alayón, "the Venezuelan government has direct control over food distribution in Venezuela" and that the movement of all food, even among private companies, is controlled by the government. Alayón states that the problem is not distribution, however, but production since "nobody can distribute what is not produced" Expropriations performed by the Venezuelan government resulted in a drop in production in Venezuela. According to Miguel Angel Santos, a researcher at the Kennedy School of Government of Harvard University, as a result of expropriations of private means of production since 2004, "production was destroyed", while a "wave of consumption based on imports" occurred when Venezuela had abundant oil money.

Smuggling

In an interview with President Maduro by The Guardian, it was noted that a "significant proportion" of the subsidized basic goods in short supply were being smuggled into Colombia and sold for far higher prices. The Venezuelan government claims that as much as 40% of the basic commodities it subsidizes for the domestic market are being smuggled out of the country, into neighboring countries, like Colombia, where they are sold at much higher prices. However, economists disagree with the Venezuelan government's claim stating that only 10% of subsidized products are smuggled out of the country. The creation of currency controls and subsidies were also noted by Reuters as being a main factor that contributes to smuggling.

Food consumption

In 2013, President of the Venezuelan government's Instituto Nacional de Estadística (INE) Elias Eljuri suggested that all shortages in the country were due to Venezuelans' eating, saying that “95% of people eat three or more meals a day” while referencing a national survey. Data provided by the Venezuelan government's statistical office instead showed that in 2013, food consumption by Venezuelans actually decreased.

Rationing

Empty shelves in a store due to shortages.

Food

Economists state that the Venezuelan government began rationing in 2014 due to multiple issues, including an unproductive domestic industry that has been negatively affected by nationalizations and government intervention, and confusing currency controls that made it unable to provide the dollars importers need to pay for the majority of basic products that enter Venezuela. According to Venezuelan residents, the government also rations public water to those who use water over 108 hours a week due to the nation's poor water delivery systems. Gasoline is also rationed in Venezuela allegedly due to smuggling of the subsidized Venezuelan gasoline to Colombia where it is sold for a higher price.

In February 2014, the government stated that it had confiscated more than 3,500 tons of contraband on the border with Colombia—food and fuel which, it said, was intended for "smuggling" or "speculation." The President of the National Assembly, Diosdado Cabello, said that the confiscated food should be given to the Venezuelan people, and should not be “in the hands of these gangsters.” One month later, President Maduro introduced a new "biometric card" that requires the users fingerprint called Tarjeta de Abastecimiento Seguro for purchases in state-run supermarkets or participating businesses that is allegedly meant to combat smuggling and price speculation. It has been described as being both like loyalty programs and a rationing card. In May 2014, months after the card was introduced, it was reported that 503,000 Venezuelans had registered for the card. In August 2014, it was reported that the Tarjeta de Abastecimiento Seguro failed to go past the trial phase and that another "biometric card" was going to be developed according to President Maduro.

Soon thereafter, in August 2014, President Maduro announced the creation of a new voluntary fingerprint scanning system that was allegedly aimed at combating food shortages and smuggling. The Venezuelan government announced that 17,000 troops would be deployed along its border with Colombia, where they will assist in closing down traffic each night to strengthen anti-smuggling efforts. The effect of the nightly closings will be assessed after 30 days. Following large shortages in January 2015, Makro announced that some stores would begin using fingerprint systems and that customers would be rationed both daily and monthly.

Utilities

The blackouts are just more evidence of an utterly dysfunctional government ... This is a government that is not governing.

Michael Shifter, president of Inter-American Dialogue

Rationing of utilities of electricity and water began to increase into 2016. Shortages of water in Venezuela resulted in the Bolivarian government mandating the rationing of water, with many Venezuelans no longer being able to freely have water enter their homes and instead relied on the government to provide water a few times monthly. Desperate Venezuelans often displayed their frustrations through protests and began to steal water "from swimming pools, public buildings, and even tanker trucks" in order to survive. Due to the shortages of water, there were "increased cases of diseases such as scabies, malaria, diarrhea and amoebiasis in the country", according to Miguel Viscuña, Director of Epidemiology of the Health Corporation of Central Miranda

Venezuela also experienced shortages of electricity and was plagued by common blackouts. On 6 April 2016, President Maduro ordered public workers to not go to work believing it would cut down on energy consumption. However, the workers actually used more energy at their homes using air condition, electronics and appliances. On 20 April 2016, the government ordered the rationing of electricity in ten Venezuelan states, including the capital city of Caracas; a week after moving Venezuela's time zone ahead and telling Venezuelan women to stop using hairdryers, all attempts to curb electricity usage. Two days later on 22 April 2016, minister of electricity, Luis Motta Dominguez, announced that beginning the next week, forced blackouts were to occur throughout Venezuela four hours per day for the next 40 days.

Response to rationing

Venezuelan consumers mainly had negative feelings toward the fingerprint rationing system, stating that it created longer lines; especially when fingerprint machines malfunctioned, and that the system does nothing to relieve shortages because it only overlooks the large economic changes that the country needed to make. Following the announcement of the fingerprint system, protests broke out in multiple cities in Venezuela denouncing the proposed move. The MUD opposition coalition called on Venezuelans to reject the new fingerprinting system and called on supporters to hold a nationwide cacerolazo that were primarily heard in traditionally government opposing areas. Students in Zulia state also demonstrated against the proposed system. Lorenzo Mendoza, the president of Empresas Polar, Venezuela's largest food producer, expressed his disagreement with the proposed system, saying it would penalize 28 million Venezuelans for the smuggling carried out by just a few. Days after the announcement, the Venezuelan government scaled back its plans on implementing the new system, saying the system is now voluntary and is only for 23 basic goods.

Despite the displeasure of the system, in an October 2014 Wall Street Journal article, it was reported that the fingerprint rationing system expanded to more state owned markets.

Effects

Shoppers waiting in line at a Mercal store for government subsidized products.

Arbitrage and hoarding

As a result of the shortages and price controls, arbitrage (or bachaqueo), the ability to buy low and sell high, was created in Venezuela. Goods subsidized by the Venezuelan government and smuggled out of the country where they are sold for a profit are an example of this. Hoarding had also increased as consumers in Venezuela grew nervous of shortages.

Crime

Due to shortages of particular goods, violent thefts had occurred in Venezuela so individuals can acquire those items. Venezuelan motorcycle organizations have reported that motorcyclists have been murdered for their motorcycles due to the shortage of motorcycles and spare parts. There have also been reports of Venezuelan authorities being killed for their weapons and trucks full of goods being attacked in order to steal desired merchandise inside of them.

Looting

In 2015, growing frustration due to shortages and waiting hours in long lines for products led to looting throughout Venezuela. According to the Venezuelan Observatory of Social Conflict, hundreds of events involving looting and looting attempts occurred in the country in the first half of the year. It was also stated that the looting was not recent to 2015 but had been increasing throughout the year, with looters showing signs of "desperation and discomfort" and loot because they are "frustrated by the inability to find basic goods".

A protester during the 2014 Venezuelan protests holding a sign saying, "I protest for the scarcity. Where can we get these?'

In July 2015, BBC News stated that due to the common shortages in Venezuela, every week there are videos shared online showing Venezuelans looting supermarkets and trucks for food. In Ciudad Guyana at the end of July, looting occurred in the city that resulted in one death and dozens arrested.

Protests

Demonstrations against the effects of shortages have occurred throughout Venezuela. In August 2014, many Venezuelans protested against the fingerprint rationing put in place by the Bolivarian government while protests against shortages grew from late-2014 into 2015. Of the 2,836 protests that occurred in the first half of 2015, a little more than 1 of 6 events were demonstrations against shortages. In 2016 after shortages of water began to happen, growing incidents of protests against such shortages started occur.

Health effects

Physical

Medical shortages in the country hampered the medical treatment of Venezuelans. Shortages of antiretroviral medicines to treat HIV/AIDS affected about 50,000 Venezuelans, potentially causing thousands of Venezuelans with HIV to develop AIDS. Venezuelans also stated that due to shortages of medicines, it was hard to find acetaminophen to help alleviate the newly introduced chikungunya virus, a potentially lethal mosquito-borne disease.

The physical effects of poor nutrition due to shortages also affected the majority of Venezuelans. A 2016 survey by the Bengoa Foundation found nearly 30% of children malnourished. According to nutritionist Héctor Cruces, generations of Venezuelans will be affected by the shortages becoming malnourished, causing stunted growth and obesity.

Psychological

Overall, at the precise moment when you stop finding a product, it becomes more precious than it used to be... Think of it as a work of art that was stolen and when it is found the price is three times higher.

Eldar Shafir

In 2015, concerns about shortages and inflation overtook violent crime as Venezuela's main worry for the first time in years according to pollster Datanalisis. According to chief executive of Datanalisis, Luis Vicente Leon, since insecurity has plagued Venezuela for years, Venezuelans had become accustomed to crime and gave up hope for a solution to crime. Vicente Leon states that Venezuelans instead had a greater concern with shortages and became preoccupied with the difficulties surrounding them. Eldar Shafir, author and American behavioral scientist, says that the psychological "obsession" for finding scarce goods in Venezuela is because the rarity of the item makes it "precious".

Statistics

In February 2015, there was an 80-90% shortage rate of milk (powdered and liquid), margarine, butter, sugar, beef, chicken, pasta, cheese, corn flour, wheat flour, oil, rice, coffee, toilet paper, diapers, laundry detergent, bar soap, bleach, dish, shampoo and soap toilet.

In March 2016, it was estimated that 87% of Venezuelans are consuming less due to the shortages. There was a 50% to 80% rate of food shortages with 80% of medicine was in short supply or not available.

List of items affected

Listed below and categorized alphabetically are items that have been or are currently affected by shortages in Venezuela:

Food products

B

3

C

3

E

3

F

3

H

3

I

3

J

3

L

3

M

3

O

3

P

3

R

3

S

3

V

3

W

3

Health and hygiene products

A

3

B

3

C

3

D

3

E

3

G

3

H

3

I

3

L

3

M

3

P

3

R

3

S

3

T

3

U

3

Household and maintenance products

A

3

B

3

C

3

D

3

F

3

I

3

N

3

T

3

V

3

Miscellaneous products

B

3

C

3

N

3

S

3

V

3

See also

• 2014 Venezuelan protests
• Dakazo
• Economy of Venezuela
• Healthcare in Venezuela