15 years of triumphant chavista Bolibanana Revolution and I only got that rancho

When I moved to San Felipe, Rafael Caldera had managed to do about half the the highway between San Felipe and Moron, with a bankrupt country. After 14 years of chavismo flush with cash, only a couple more exits have been added in what is perhaps the second most used road of Venezuela. Thus the last stretch between Moron and the highway is still about 12 Km of the two way original road, clogged with jalopy buses, trucks of all sorts carrying all the goods from Puerto Cabello to Barquisimeto and the Andes. And to enter the highway, you need to go through about half a mile of what is a dirt road, or rather of original country side lane turned into dirt by the big traffic.

The natives have gotten into the habit of selling crap to the passing truckers who of course stop to talk to the tightly to scantily clad girls selling them little cups of coffee from a thermos. Meanwhile you wait patiently for the transaction and small talk to be over.  But these points that develop rather fast each time a a new exit is incorporated in the highway, are also the nuclei of some new, shall we call it, settlement.

The one I picture here has caught my fancy. Finally using my powerful zoom I managed to take that picture the other day, ever so slightly blurred in the second image which is a cut out of the original one that opens this post (already quite reduced). After all, I could not stop my car, and I had to take the picture while climbing up the dirt road access to the highway.

The first shot is, of course, an "invasion" at the side of the road, which has not stopped the new owner to surround it with a fence. "Invasores" are born landowners, you know... Click to enlarge.

You may note on the bottom right the edge of my rear side window, a shaded stand that is probably put to some use on week ends, and a DIRECT TV SATELLITE DISH!!!!!  The house may be built on mud and straw but electricity is stolen from somewhere and they got a Direct TV decoder. Not for them to satisfy themselves with VTV and RNV that run for free in that area, the only thing the locals can get there.

The second pic shows more details of this native "mision vivienda", where the guys have even planted palm trees and some flowering bush.  If this were one of the few unique folksy expressions of Venezuela we could be amused. Unfortunately, after 14 years of chavismo and now almost 3 of Mision Vivienda, such scenes are closer to the norm than the exception.

What a beautiful revolution......

NOTE: if that last bit of highway had been done, not only it would save me at the very least 15 minutes from my trip to Caracas, but it would improve greatly the living conditions of the Moron inhabitants who still voted 70% for Maduro. How ironic!  Amen that sometimes crossing Moron can take 30 minutes or more.... depending what time of the day you attempt that crossing.  But see if I care, they deserve what they got, if you ask me.

Are there simple measures to stop provisionally Venezuela's slide into major recession?

I was thinking that after my post yesterday on how the regime has no clue as to what to do to boost exports, it would be fair for the readers of this blog to list what could be the bare, minimal measures that seen from ground zero could help Venezuelan producers to stay in business and perhaps increase production.

I must warn the readers that this is not a list about recovering the country: this one would be much longer and would require several years of work, and the end of the current "model". What I am listing below are simple measures that would bring back some good will, some desire to reactivate some production sectors and that would, for a couple of years, avoid further decline in the production of food stuff. In short, what I am proposing is what the regime could do to gain a couple of years until it settles its internal affairs and decide what it wants to do on the economy.  Assuming of course that inside the regime there is a sector large enough that does not want to see the country turn into a Cuban style outright rationing of goods. If the internal balance of power is going the Saman way, more controls, more hard stance, ration cards are to be expected by the end of the year.

The basic problem of the regime is to get dollars so that some productive sectors can purchase raw materials and supplies to increase production of whatever can be increased inside Venezuela, considering the extensive damage that has been wrought on the industrial and agricultural sectors in the last decade. We are not talking expansion here, we are talking recovering the 100% capacity of production which is currently between 30 and 80% depending on the sectors (my estimations, there is no comprehensive evaluation that I know of, even Polar is not working 100% because they do not have enough raw material). The idea would be for the "pragmatic sector" of the regime to get more bang for the buck by producing some stuff locally rather than importing the finished goods (which does not please the corrupt trafficking gang but let's assume that the pragmatic sector of the regime can rein in their appetite for a couple of years).

The first measure is thus to create a dual exchange system (Miguel speaks of a possible return to the famous "permuta" of a SICAD on fluoride). I personally think that a dual exchange is best and simplest and slightly less corruption prone than SICAD or permuta. The 6,3 current exchange rate is pushed to 8 and reserved strictly for import of raw material and supplies for food and medicine. Everything else is sent to a fixed exchange that I would put at least at 12 to start with. Preferably 15 outright.  Inflation would be pushed by another ten points but at this point, with monthly rates in the 6-8%, who cares really.....  The economy would crunch fast but whoever can work may start working again and in 6 month we could "grow" again.

This working devaluation needs to be compensated for the chavista masses and the regime needs money to subsidize a reduced social program that includes only Mercal and Barrio Adentro. Where to find the money for that? In addition to the dollars already needed for the devaluation described above so that its purpose can be accomplished.

Gas price hike is one way. To avoid major upheaval, it should be calculated such as to bring in, say, and extra 500 million a month by reducing gas consumption to at least stop the current gas imports bleed. The impact on inflation would be rather minor considering the current situation.

Explain to allies that they will need to tighten up their belt. That is, out of Petrocaribe and Cuba, another 300 million a month must be obtained.

Stop all weapons purchases whatsoever for at least 2 years, postpone any current contract execution for at least two years. Limit infrastructure purchases for one year strictly to what is needed to recover current communication ways (no more trains, no more highway from Portugal, no nothing, just start filling up holes in highway and fix up bridges and the like). Have Mision Vivienda, pared down, and sent to local constructors to build cheap homes, who can do it cheaper in dollars than the idiots of the sino-russian mafia involved.  There is at least another 200 million there.

All in all the regime needs to find an extra billion dollar a month to import supplies for folks like me so we can produce food again. Not to become self sufficient but at least to stop the constant increase in food import. It is quite possible, it is quite feasible but it involves the will to put a stop to the mafia easy contracts.....

But that is not all: we need also real incentives for us, producers, to risk again our assets and health to produce in this hell.

There is a real need to render flexible price controls so as to adjust them to inflation fast. Inflation can only be curbed when production reaches reasonable levels again so that some competition will start. There is no other way around. Since we have inflation already anyway, might as well harvest its benefits.

The regime not only needs to declare the provisional end of expropriation for at least 2 years, but should have the guts to recognize that the expropriations that led nowhere should be returned to their original owners. That is, AgroIsleña should be returned to their old owners if the regime intends agricultural production to return. And lands that have been expropriated without results should also be returned, through some form of ad hoc commission. That commission may not do shit but at least it will reassure those who still have productive land.

I can vouch myself on at least two sectors that can recover fast: poultry and coffee.

An adequate supply to poultry producers can restore Venezuelan self sufficiency in a mere year. If the price of chicken is too high for "el pueblo" the regime needs only to buy, say, 30% of the production and resell at specific Mercal programs at a lower price. Even that 30% subsidized would be cheaper for the regime than buying frozen chicken from Brazil.

If coffee prices are freed for good, I can assure you that within three years the Venezuelan production could recover enough to satisfy the market and perhaps even consider some small exports. In the first year the illegal shipments to Colombia stop, and in three years the existing deteriorated coffee farms can be recovered through some small credits and be put to produce again. It is THAT simple. But that would mean stopping buying coffee from Nicaragua, yet another mafia sure to bitch.....

Some other sectors like dairy will take longer to recover because it takes time to rebuild the cattle population. Grain production will not be rapid because too many lands must be recovered after improper expropriations, and we may simply not have enough farmers to get the job done since those that have been chased from the countryside through expropriations may not be willing to come back.  Also that recovery is also tied in large part to personal security of agriculture people as well as repairing access roads, etc... But some sectors, like the ones I mentioned, can have a significant recovery in three years or less, if the regime let's them work.

You will observe that the measures offered are not drastic, do not even question the current model as they can be presented as a transition and do not preclude the regime to intervene again in production later with a "renovated model" maybe based on more cooperation while "el pueblo" is led to think that the government calls all the shots. You will also observe that what I propose does not promote new investments, just a refurbishing of what is already in place and that any positive effect would be seen over two to four years and then nothing more. But we need to start somewhere since nobody in his right mind will invest his or her own money in Venezuela today.

Yet, I am afraid that even such a simple plan is too much for the regime at this point who prefers to buy a highway from a Portuguese company rather than accept that local builders may be able to do it for cheaper.  In that regard chavismo is alive and well and keeps driving us to the ground. Note: Portugal signed even though I am sure they know we are bankrupt and that the regime may not last much longer. At least the coming government can be sued for breach of contract and Portugal will get something anyway. So we are not done paying for the hubris of Chavez and his heirs.....

Maduro is a fascist idiot, the worst kind because they are cruel by sport

Lorenzo Mendoza promoting his competition?
Harina PAN all alone in the middle....

So tonight finally I checked out a few headlines and sure enough there is just too many idiocies that I cannot go to bed until I vent a little bit with you guys.

Apparently Maduro has been making a total ass of himself. I mean, TOTAL, as in without possible redemption, total enough that we truly must wonder why in hell Chavez named him his heir. Heck!  Even Ramirez starts looking good in comparison.  However I must also say that the idiotic presentations of Maduro seem at least to come in big part from his totally inadequate staff. What we see this week is the result of what happens when dumb instructs idiot.

Let's start with the Polar case I left you with last week end. Maduro attempt at blaming the Polar group for all of the food scarcity problem backfired badly as early as Monday when Lorenzo Mendoza, spotting a cheap shirt and surprising long hair showed all the corn flour brands that are supposedly produced in Venezuela. This great picture, reproduced from many angles depending on the media reporting  is clearly understandable for the Venezuelan on foot, in line, branded, for a couple of kilos of corn flour. They all know that when they find corn flour, it is most of the times from Polar, almost none from the other brands. Polar is the lone one working.... On Tuesday the regime had to back down and pretend that they were going to be all love and kisses and collaboration with Polar which may get, hold tight, a lease of some state plants that went under to refurbish them for the regime to pretend it produces corn flour again....

You would think that a chastised Maduro would know better, that by now he should have realized that the staff ad the food and agriculture ministries had no f*****g ideas of Polar realities and numbers and that he would stay quiet for a while.  Think again.....  On Thursday he attacked another big group, Protinal. This is the main poultry producer in Venezuela, at least a third of the country  and possibly the best run business in that field. I know that as a fact.  Apparently Maduro received a complaint from a local producer that Protinal refused to buy his corn, preferring instead to import it. So Maduro made a big show, accusing Protinal of sabotaging the local production of corn. and easy charge to do since Protinal is partly owned by Cargill, a world grain trader.

Unfortunately the guys around Maduro once again got it all wrong, pathetically wrong. To begin with, the local production is not enough anyway to cover all the corn needs for the country, be it white corn for Polar and its Harina PAN or yellow corn for livestock feed. Second, to be allowed to import corn you must prove that the bulk of Venezuela's crop has been bought and that there is a need to import. The regime would know that, Ivan Gil the minister for agriculture would know that if he were not such a political hack. His people signed whatever import license Protinal had. Third, indeed the regime forces my customers to buy corn but sometime the corn is of such low quality that they must refuse since the corn would kill their livestock because of its moldy content, its poor nutritional value, etc.... I also know that as a fact, I have seen many quality control results from many people in my consulting activities. Whoever complained to Maduro I am willing to bet had a dismal corn not fit for animal consumption. And finally, if Protinal in the end took its chance in not buying that corn it was because harassed enough elsewhere by the regime (CADIVI, supplies, labor laws, etc...  see this entry of the blog) it could not afford the losses in dead animals that this toxic corn would have caused.

OK, that would be enough for yours truly who knows his stuff.  But nooooo...  there had to be two purely extra fascist moments lurking in the news.

The idiot one first  Maduro has convoked (what is that new mania of convoking everyone now? Is this "I am not Chavez" attempt at renewing his image?) the owners of Venevision and Televen to his office next Monday. What for? To make a new type of TV, away from the anti values of capitalism,  away from promoting violence and what not. No more tawdry soap operas, no more violence inducing shows, only wholesome shows from now on. I guess cable TV and Direct TV will be banned too......  Fundamentalists in the US would be so lucky to have Maduro as president.....

But if the more than lame excuse of Maduro is officially that high crime rates in Venezuela are linked to bad TV the real reason is elsewhere: Maduro has been smarting that Televen and even Venevision dared to show some of Capriles activities in the last campaign. Very little did they show, and even less of Capriles questioning Maduro's pseudo victory  But that little was too much. So what Maduro is going to tell Cisneros and Camero next Monday is that he is going to prepare a Damocles sword of a law that will force them into passing bland ratings killing shows if they give the microphone to Capriles again.  Besides that naked show of fascist power, I am not going to shred a single tear for Cisneros and Camero and hope they will be shut down at once: these creeps negotiated with Chavez in the hope that offering bland to non critical news whatsoever would shield them from abuse of power, protect them from fascism.  Serves them right for abandoning RCTV or even helping to its demise as the case of Cisneros was, to his never ending shame.

And last but not least, the latest outrageously fascist attack of Maduro.  He had the nerve to say on the video below that he knows the identity of the 900,000 chavista that did not vote for him last April and that he was going to do something about it.  First, he admits publicly that indeed he lost that many votes, at the very least we should add if votes were truly counted as they should. Second he is lying because no matter what the electoral board did in matters of cheating it is very difficult to know who voted for whom unless hidden cameras were located in voting centers.  This is just a brutal and cruel fascist ploy to scare people into voting for Maduro next time, as if, I suppose, elections were coming soon...  Does Maduro knows something we do not know?




You can see it here, at second 28, he mentions the 900,000, ; at 34 seconds he says that we have their ID numbers; and there is a menacing pregnant pause that starts at second 36.......  with the evil smile included.......

XXI century fascism at work......

Massive shortages of corn flour in Venezuela

Line at a La32, a Chinese everything joint

This week we have seen dramatic shortages of the Venezuelan basic staple, at least outside of Caracas and in low income social classes: corn flour.  Newspapers in Caracas are strangely silent about it but other papers like El Impulso of Barquisimeto are more vocal.  Yesterday and today driving around San Felipe I saw long lines of people. But today was top: in a single short errand I saw three, 3, long lines of people waiting for a single thing: Harina P.A.N., the most basic, well known staple of the Venezuelan kitchen, now available world wide except in Venezuela. I managed to take two pics for you, but that is not all.

El Impulso earlier this week was showing front page the ridiculous long line in a Barquisimeto location, but also, way more damming, how people were branded for their turn in line!!!  I am also putting these pictures at the end of this entry.

Line at MAKRO San Felipe, coming from INSIDE the store out.

What can we make out of this?

First, that ration cards are not far in the future. Though in Venezuela it may be easier for the regime to be highly unjust and limit itself to branding people as an easier way to "manage" the food shortage.

Branding people, El Pueblo, in line.

Second, it is clear, crudely clear, that the regime has been so focused on its political survival since last year opposition primaries that it has simply neglected to attend to economic matters, has not taken previsions for a diminished corn crop, has no money to buy corn at world price, not to mention that corn meal for Venezuelan Arepa is different than the one used for Tacos and Tamales in Mexico. Venezuelan Corn meal is pre cooked in a process that allows for preparation of an arepa. Thus you cannot make tacos with Harina PAN just as you cannot make arepas with any brand of Mexican corn flour you may find.

And to make this even worse, Venezuelans like their corn meal from white corn, not yellow corn. So finding white corn overseas is not easy because Venezuela is the main consumer of white corn, and used to be the biggest producer probably  But even the few eccentrics like yours truly who much prefer yellow corn meal for their arepas cannot find it anyway. In San Felipe or Caracas it has been more than one year since last time I saw yellow corn meal. I have been told that it can be found only in Oriente where people have a liking for that more flavored variety of corn but even there it is in short supply so the regime does not allow it to be sent to other states. Or something like that since no one in the government is willing to fess up to their incompetence and Polar is certainly not going to make a fuss about it, so harassed it is already by governmental abuse.

Line for Harina PAN in Barquisimeto, across the highway through the on foot pass.

Speaking of Polar. This food manufacturing giant of Venezuela is always under threat but produces more than ever the bulk of corn flour in Venezuela. All the attempts by the government at producing their own brand of corn flour have failed because of its inherent incompetence or simply because they produce a sub par product and lower classes are willing, if allowed to, to pay a surplus for Harina PAN. Meanwhile long ago Polar has set shop in Colombia from where it can export to the world Harina PAN, found in specialty stores from Sidney to Paris.  This, of course  underlines that if Polar were left to work on its own in Venezuela and were not harassed by the regime as it is, there would not be a corn meal crisis today. Period.

Fascist branding? Or is that Commie branding? I get confused sometimes....

I invite you to read the post before this one on why Venezuela's agribusiness is under such stress, to help you to understand better why do we have to brand people in line in the hope of avoiding a riot....

Maduro is looking for food.... A primer on food crisis in Venezuela

I am not making this up: Maduro, the pseudo-president of Venezuela has justified his trip to Uruguay with this excuse among others:

“Parte clave de la gira que yo arranco mañana (...) es para garantizar fortalecer nuevamente la reserva alimentaria de productos básicos de nuestro país a tres meses"
A key part of the tour I am starting tomorrow (...) is to guarantee to strengthen [sic] again the food reserve of basic products of our country for three months. (I am sorry, I cannot translate it any better, the guy cannot speak properly).

So many things wrong already there, not to mention that he also accused the private agricultural sector of hoarding and sabotaging the transition to socialism. Thus I suppose that I need to write a primer on food shortages in Venezuela as the one I did a few days ago for media.

Is the food crisis real? Yes, we do not produce enough to feed half of the population and there is no sign of the crisis being resolved.

Why can't Venezuela produce enough food when its neighbors, Colombia, Brazil and Guyana, with similar climates and soils produce enough to export to Venezuela? The dependence on oil has induced ALL governments of Venezuela, since at least 1958, to consider agriculture as a secondary issue, only used for political purposes. Price controls, subsidies and quotas have been all invented BEFORE 1999. Chavismo merely exacerbated the situation through excessive use of these control tools combined with its chronic incompetence and its insatiable corruption. Without forgetting that chavismo got more money than all previous governments since 1958 combined to spend on food imports.

Why are chavismo controls on agriculture excessive? I will give you a simple example. Any person producing supplies that are directly included in any form of food, from livestock feed to a jar of margarine in your refrigerator needs to declare its production and where that one is sent. I know that because I have to fill such forms weekly. It works this way: through Internet I must declare everything, from the nature of the load to the specific ID of the driver and truck. Not forgetting the date at which the transport HAS to take place. Then the government will decide whether to approve that shipment. When it is raw materials it is usually approved without a hitch but when it is food for human consumption sometimes you are refused to serve a given district because for some unexplained reason the government considers it as already served in full and demands you to send it elsewhere. Like this complex procedure, prone to errors, I can list a score more of such regulations that do not exist in free market countries where store shelves cringe under the weight of goods.

Is hoarding a reality in Venezuela? Hoarding is a reality in ANY economy of the world, but it only happens with items of high value, small volumes, and usually under special economic circumstances. Hoarding almost never happens with commodities because not only the margin of profit there is not worth the trouble,  but also their sheer volume makes its difficult to accomplish (except, note, for cartels like OPEC which hoards its oil under ground as it pleases). And hoarding never happens with perishables unless your war economy market ensures that customers will eat rotten food. Simply said, in a global economy hoarding is difficult, does not bring high dividends and can result in you losing your market share. Venezuela does not escape from these general considerations. Even if people were trying to hoard stuff you can realize yourself that with the controls I described above, hoarding can only be successful if the people in charge of the controls are cooperating with you for kickbacks. For all practical purpose, hoarding can take place in Venezuela only at the level of local groceries, not at the level of production facilities as the regime would like you to believe.

Why the regime uses the hoarding card again and again? In an exacerbated populist regime that goes from one economic error to another one, accusing the private sector is a good way to use the ignorance of the masses to focus the blame elsewhere. The fact of the matter is that it has been years since anyone got a solid sentence for any case of hoarding even if the regime was prompt in sending them to jail for a few days based on a superficial inspection of production and storage facilities.  When details come clear, once the regime journalists shut up and the producer can finally speak, we discover that any "hoarder" that was inspected never had much in store, at most a week of inventories which is below what any serious business has in serious countries under normal conditions. But certainly, the picture of a week inventory of a depot in Valencia makes for a nice political picture for people who think the shelves content in local bodega is "a lot".

Surely the renewed accusation of Maduro about hoarding cannot be the whole story as to him looking for food in tiny Uruguay? Certainly not. Maduro is paying for 14 years of agricultural mismanagement that started as soon as Chavez assumed office. By 2000-2001 expropriations of productive lands started with the expected consequences. The regime, for all its efforts, cannot show an expropriated property that produces MORE than what it produced before expropriation. When Agroisleña, the main agricultural supplier, was expropriated in 2010, it created a void that has not been filled and that has hit productivity hard. And to lower confidence of the agricultural sector, Ivan Gil, who has failed at the head of Agroisleña/Agropatria is now the new sector minister.

Can we blame expropriation alone? No, even if in my opinion expropriation are the main cause of the agricultural failure of the regime, at least psychologically, there are other reasons that weigh heavily.  Currency exchange controls have been a major problem because the deficit in currency to import supplies has created havoc with production plans. As a consequence, import deficiencies and minimum investment by the private producers still at work has created an agricultural sector at least a technological decade behind other agricultural giants like Brazil in Mercosur. One pathetic example is how Venezuela was still producing enough coffee in 1999 for its consumption and now has to import half of what it needs while coffee plantations are increasingly abandoned. Even Yvan Gil has been forced into recognizing the critical state of that sector! A sector unable to compete today with international standards of quality and yields.... while the regime happily props Nicaragua by buying all of its low quality coffee.

Surely, with such scarcity those who are still working must be minting coins? Of course not. The most pernicious governmental action is the preservation over a decade now of price controls which are not adjusted according to inflation to preserve at least a balance. Subsidies also are not enough when inflation goes faster than any subsidy adjustment. Apparently the chavista bureaucrats in Caracas, from their AC offices, since they know better what the price of the crops should be than the guys in the field, fighting back insects, sun and heat. The political necessity of slowing down inflation (which has failed miserably) has made the government to force producer to sell below cost certain goods. How can the regime expect people to work hard, to invest in technology to increase productivity when they cannot be rewarded, or pay for technology and supplies?

So, in the end, what is the truth about production?  Impossible to say. Ivan Gil has the gumption to state that Venezuela produces more than in 1999 when Fedeagro says we are 30% down in recent years. The truth is that it is impossible to know exactly what is truly produced in Venezuela. The regime statistics cannot be audited (like the electoral numbers!). In addition, there are numerous reports of the regime importing stuff and labeling it Hecho en Venezuela. I personally know about imported raw sugar, finished to white here and thus claimed to be fully produced in Venezuela. Also, live cattle arriving at Puerto Cabello to be slaughtered in Venezuela leaves as carcasses Hecho en Venezuela. On the other hand Fedeagro has only access to what private producers tell them so they may be more negative than necessary. In short, for the last half decade it is impossible to know how bad the agricultural sector numbers are.

The crude reality. Agricultural production in Venezuela cannot properly grow for a variety of reasons that the regime is unwilling to tackle for political reasons and for corruption. In addition to adverse conditions (deficient road infrastructure, difficultly to find supplies, unruly workers no matter how much you pay them, if you can find them, problems with electricity supply, questioned property rights) the courageous producer has to face costs that do not exist in other countries (personal insecurity, unyielding bureaucracy, inflation now three years in a row above 20%) without the means to counter these costs and conditions (price control, interdiction to export any food item out of Venezuela). The only thing that has allowed some agricultural production to remain alive is that banks are forced to loan at preferential interests a portion of their portfolio to agribusiness  Those loans whose interest rates are below inflation are the last life line left for the country side. And they benefit much more the larger concerns than the small producers which are squeezed out of the field inexorably.