Venezuelan Government Forces Companies To Hand Over Food As Shortages Intensify

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Guy Bentley Research Associate, Reason Foundation
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Venezuela’s economic crisis is worsening. The socialist government is forcing companies to distribute food to state-run supermarkets.

Producers of basic foodstuffs like pasta, oil, flour, rice and sugar are being forced to supply between 30 percent and 100 percent of their produce to government stores, according to The Associated Press. The compulsory reallocation of food to government-owned stores could have serious consequences for supply and distribution.

In Venezuela, there are 15 times more private supermarkets than government ones. President of the Food Industry Chamber Pablo Baraybar lashed out against the move and said “problems like speculating will only get worse because the foods will be concentrated precisely in the areas where the resellers go,” The Telegraph reports.

“Consumers will be forced to spend more time in queues, given that the goods will be available in fewer stores,” Baraybar added.

President Nicolas Maduro, successor to Hugo Chavez, has continued the country’s policy of strict capital, profit and price controls. These have had a devastating effect on the economy with the currency losing 32 percent of its value just in the last month. Venezuela also has the highest inflation rate in the world at 64 percent and has been battered by the collapse in oil prices over the past year.

Back in February, Maduro accused business leaders of “conspiring” against the people and trying to undermine his government. The president accused businessmen of waging “economic war” and deliberately cutting the number of cashiers at stores to create long lines.

Since Maduro came to power, the poverty rate rose from 25 percent in 2012 to 32 percent at the end of 2013. In 2014, according to the Fraser Institute’s Economic Freedom of the World Index, Venezuela was ranked the least economically free country in the world. (RELATED: Venezuelan Bishops Blame Socialism For Country’s Woes)

Leading Harvard economist Carmen Reinhart argued last year the situation had become so bad in Venezuela that a default on its foreign debt may be part of the solution.

Speaking to Bloomberg, Reinhart said “what they really need to do is get their house in order. If an external default would trigger such a possibility, that’s not a bad thing.”

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