Thursday, March 5, 2009

Zimbabwe del Sur: Chavez tightens state control of food amid rocketing inflation and food shortages

Guess what happens when you drive out the private sector and set prices?
From the Telegraph:

President Hugo Chavez is tightening state control over Venezuela's food supply, setting quotas for food staples which are to be sold at government-imposed prices.
...Production quotas and prices have now been set for cooking oil, white rice, sugar, coffee, flour, margarine, pasta, cheeses and tomato sauce.

White rice, the staple for many Venezuelans, can now only be sold at a price of 2.15 bolivares (71p) per kilo. Private companies insist that production of that kilo costs 4.41 bolivares (£1.46) and that government regulations are impossible to fulfil and companies will quickly go broke. Companies that are dedicated to rice production must ensure that 80 per cent of their efforts are dedicated to white rice. The new regulations set production percentages, as companies were rebranding their products to avoid the government controls, like flavouring the rice, as the price restrictions apply only to white rice.

"Forcing companies to produce rice at a loss will not resolve the situation, simply make it worse," said Luis Carmona of Polar, a rice company that has been singled out by the government for trying to sidestep restrictions....MORE