Development: On 11 October a Venezuelan government official refuted the day-earlier announcement of food price increases at the state-run discount supermarkets, Mercal.
Significance: On Monday (10 October), Agriculture Minister Carlos Osorio publicly announced phased price increases from January 2012 for 14 basic foods sold at heavily discounted prices throughout the 16,600 Mercal stores. Osorio blamed higher international prices but also noted that the state needed Mercal outlets to be “sustainable”. The very next day, Ricardo Menéndez, the vice-president for productive economy, flatly refuted any such plans.
Key points:
• Mercal prices were last increased in mid-2009. Since then, food price inflation has accelerated rapidly. Indeed, on central bank figures, accumulated food price inflation between September 2009 and September 2011 was 75.6%. And although Venezuelan oil prices are at their highest ever, averaging almost US$100/b to date this year according to the ministry of energy, the government led by President Hugo Chávez seems to have continual cash flow problems. Yesterday, it announced yet another global bond issue (US$3.0bn). Local economists report that total debt issuance by the government and the state oil firm Petróleos de Venezuela (Pdvsa) stands at US$13.3bn over the past 12 months, more than all other Latin American governments combined.
• Despite President Chávez’s stated focus on agri self-sufficiency, Venezuela still imports 70% of its food. Pablo Baraybar, the president of Cavidea, the national chamber of food industries, put the cost of food imports at BF13.01bn (US$3.0bn) in 2010, based on figures from the central bank and the national statistics institute. He suggests this will rise to BF16.0bn (US$3.7bn) in 2011. It was just US$0.54bn in 2004. Mercal sources 60% of its stock from abroad.
• Osorio made his comments at a ceremony to open a new ‘Arepera Venezuela’(formerly ‘Areperas Socialistas’). He also unveiled a new discount mineral water, ‘Montaña Alta’ (High Mountain), which will retail at BF3.0 for a 400ml bottle, about 50% of the average local market price. It is produced by the expropriated firm, Lácteos Los Andes. Osorio said the product was first rate and “sin sentido capitalista” (roughly, ‘without capitalist sentiment’). Karl Marx might turn in his grave at the idea that 21st century socialists need bottled mineral water.
