Hugo Chavez death may create fragile ag climate in Venezuela

WASHINGTON — The death of Hugo Chavez, who had a 14-year rule as president of Venezuela, leaves the country’s agricultural sector in a state of uncertainty.

U.S. Grains Council Regional Director Kurt Shultz said misguided agricultural policies have “destroyed agricultural outputs” in Venezuela.

“The country’s policy of expropriating or nationalizing domestic industry has also hurt private investment and reduced the productive capacity of the private sector,” said Shultz.

Grains council staff were in Venezuela recently, presenting results from the USGC Corn Harvest Quality Report 2012/13.

Corn market

Due to the low agricultural output, Venezuela has become the second-largest corn market after Mexico in the Latin America region, importing more than 1 million metric tons (39 million bushels) of U.S. corn annually.

Shultz said that Chavez’s successor could be up against a period of political infighting — creating additional uncertainty and risk for the livestock industry, which is already faced with price controls, corruption, and foreign exchange limits.

Aid to Cuba

Venezuela’s economic picture is also complicated by the substantial subsidies the Chavez government has been paying to Cuba and Nicaragua.

Under Chavez’s, rule, Venezuela replaced the Soviet Union as Cuba’s benefactor, with annual subsidies estimated at $3-4 billion, largely in discounted oil.

Annual payments to Nicaragua amount to around $500 million.

These are burdens for a country which, despite having one of the world’s largest oil reserves, has one of the world’s largest fiscal deficits, high inflation rates, widespread commodity shortages, and an active black-market currency where the bolivar is traded at one-fourth the official rate.

Observers say Venezuela’s economy will need time to recover, and whoever replaces Chavez will enter a tough current state.

One Comment

  1. Retired Corn Farmer says:

    As my Pappy would tell me years ago: “Son, the way you make your bed is the way you’ll sleep in it.” So after 14 years of Socialism, where are the citizens of Venezuela relative to corn and other commodity imports? Let’s recall Aesop’s grasshopper and ant tale.

    Productive farmers=ants. Takers/Gimme/non-producers=grasshoppers.

    America cannot be the free “breadbasket” or “policeman” of the globe.

    Another one of Pappy’s truisms: “…No money…No Funny.”

    No money, no corn. It’s that simple. If corn farmers, churches, missionaries, or charity groups want to send some corn, God bless them.

    Venezuela and her people who drank the Chavez Kool-Aid are going to find out real quick what they voted for and bought into.

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