Maduro blames Venezuela's biggest food company for scarcities

[Bacchus4.0]

Caracas, May 11 (EFE).- Venezuelan President Nicolas Maduro accused Polar, the country's biggest food corporation, of reducing production and hoarding products to cause scarcities in the country, and spoke of economic "sabotage" against his presidency.

"We have many indications that Polar has been...reducing production and hiding products to cause scarcities in the consumer market," Maduro said during a event obligatorily broadcast on all radio stations and television channels.

The president has summoned the owner of the company, Lorenzo Mendoza, to a meeting this Tuesday with all his management team to explain to the government "why you are reducing production, why are you causing a scarcity of products."

Polar produces some of the basic ingredients of the Venezuelan diet, such as the P.A.N. brand of cornflour, the essential ingredient of the famous Venezuelan arepas.

http://www.globalpost.com/dispatch/news/agencia-efe/130511/maduro-blames-venezuelas-biggest-food-company-scarcities

[naaman fletcher]

1. Predictable

Price controls are ALWAYS the same story

[Bacchus4.0]

7. he's proposing that the military be used now to produce food

http://www.eluniversal.com/economia/130513/maduro-prepara-medidas-para-evitar-la-guerra-economica-contra-la-patri

Last paragraph in the story.

[naaman fletcher]

8. This place well collapse before year end. nt.

[Bacchus4.0]

11. well, at least they are getting Chinese satellites so they can watch the collapse live n/t

s

[Flatulo]

2. Expropriate!

[Marksman_91]

3. So he's blaming the scarcity on an enterprise that is actually producing to its fullest?

What the hell happened to all those other companies that the government expropriated? Aren't they supposed to be producing as well?

Oh wait, no, instead we have to import food from other countries, because the national production is simply just not enough. How typical of the enchufados. Thank God people are actually starting to realize the ruin this government is bringing the country to.

Apparently either Maduro and his lot don't really have a full grasp of modern economics, or they simply are trying to buy themselves time before the bubble bursts:

http://caracaschronicles.com/2007/02/18/six-slides/

This article explains the basics of supply and demand, for anyone who doesn't know much about it. It's mind-boggling how this government still clings to such primitive methods of trying to make the economy grow.

[Bacchus4.0]

4. thats why he isn't going to expropriate Polar. The previous businesses expropriated

have made matters worse. So if they expropriate the largest food producer/distributer and it fails (which it would) then who would they have to blame?

[Flatulo]

5. As the government tries ever harder to flout the laws of supply and demand, and fails ever

more spectacularly, they will more and more resort to physical force to try to get the universe to bend to their will. There will be more expropriations, more confiscations, more laws and emergency decrees, and more shortages of everything. The harder they squeeze, the more they will fail.

The usual script will be repeated more and more loudly - the Capitalists, Yanqis and traitors to the Revolution will be blamed, and still they will fail.

Even if one had no knowledge of the excellent graphs you linked to, one does not need them. All one needs is a memory, which would tell you that controlled economies always fail.

Denying capitalism as a natural process of humans interacting with each other is like denying the existence of gravity. We need laws to ensure that the strong do not cheat the weak, but people will always need incentives to produce, and that incentive is profit.

Communists and others will condemn self-interest and anyone who acts out of it, but they fail to see that they themselves are the most selfish of all, because they want to obtain value (food, shelter, medical care) without offering anything in exchange. They condemn the prosperous but feed off of them. They claim to hate money, but want it handed to them. They claim the rich steal their labor, but they have no qualms against stealing the fruits of others production.

[Bacchus4.0]

6. amen n/t

s

[Marksman_91]

9. Fanatics of any ideology are always detrimental to society

It's only more unfortunate when they take over power in a country. But at this point, I cannot really say the Venezuelan government is made up of fanatics. No, it's clear that what they are is a group of socially resented lunatics who only use the guise of socialism as a flag to rally the poor for their support and attain their votes so that they can remain in power and siphon as much money they can out of the Venezuelan people's own cash. But pretty soon those same humble folk are going to realize they're heading into (or already are in, but haven't noticed it yet) an abyss that's worse than the one they were in before this whole "Socialism of the 21st century" bogus started.

Maduro and the rest of the lot say they are against the tyranny of capitalism, but slowly, everyone in the country is starting to notice that those delinquents themselves are the individuals that have benefited the most from capitalism. It only takes a good look at the kinds of vehicles that they ride or the amount of personal security that always escorts them, or the foreign products they all just LOVE to use, namely from clothing and electronic brands. Their hypocrisy is eventually going to be their much-deserved downfall, though, and the coming economic and scarcity crises are only going to deal the final push. I just hope it comes sooner than later. As much as I like to see their silly little empire crumble around them, it doesn't even come close to equaling my desire to see my country actually have a respectful, educated, inclusive president who doesn't spout nonsense about extreme political ideologies and actually doesn't blame his administration's problems on other foreign entities.

[ocpagu]

10. LOL

"All one needs is a memory, which would tell you that controlled economies always fail."

Sure. Success can only be achieved by savage capitalism and unregulated economy... this current financial crisis and the situation of Europe shows that quite well.

"Denying capitalism as a natural process of humans interacting with each other is like denying the existence of gravity."

That's quite a ridiculous argument. And there's nothing "natural" about the corporatocracies of today. Adam Smith would be probably be shocked to see what these criminals are doing in his name and in the name of this thing they insist in calling "capitalism". The neoliberal model, the corporatocracies, the oligopolies and monopolies are anti-capitalist.

"Communists and others will condemn self-interest and anyone who acts out of it, but they fail to see that they themselves are the most selfish of all, because they want to obtain value (food, shelter, medical care) without offering anything in exchange. They condemn the prosperous but feed off of them. They claim to hate money, but want it handed to them. They claim the rich steal their labor, but they have no qualms against stealing the fruits of others production."

You seem to have quite an oversimplified vision of economics. A binary division where anyone who's not a member of the crazy neoliberal cult is a "communist". It's pathetic, really. "Condemn the prosperous but feed of them"? "want to obtain value without offering anything in exchange"? What the fuck are you talking about?

Your own government has DONATED hundreds and hundreds of billions of public money to save the personal patrimony of bankers and a group of criminals who carefully planned an economic crisis to get richer with the appropriation of public funds. Your working class, your people, your poors are the ones feeding your billionaires, while they send their money to tax havens.

[Flatulo]

13. Now you're the one who's thinking binary.

Our current economic mess was largely of our own making, the result of decades of deregulation (from both D and R administrations) and a free-wheeling housing market that seemed to know no upper limit.

People were buying properties that they couldn't afford, getting loans from lenders who were ridiculously over-leveraged, which loans were then turned into brand-new investment products which were guaranteed to blow up. There was no secret meeting of global elites planning this thing. It was just a joyride that hit a brick walk.

So yes, our system is screwed up. I agree with you that Adam Smith would roll over at our excesses.

I'm a pragmatist. I look at places that seem to be working well and say Gee, lets try some of that. Places that seem to be working well are the Northern European social democracies - Demark, Germany, Finland etc. They have high taxes, a strong social safety net and are very hard-working and industrious people who are also the happiest in the world. They are also very successful capitalists with a high standard of living and exports that are the envy of the world (Audi, BMW etc).

The Southern European economies are in the shitter due to corruption, poor tax enforcement, bloated government, and a much more laid-back attitude towards productivity.

I think Venezuela is on the wrong track. I may have a simplified understanding of economics, but I sure as hell know more than the current leadership there. They seem to be governing under a model of radical redistribution, low productivity, and near absolute dependance on a single resource, a resource that the rest of the world is tying to rid itself of. Does that sound like a good economic model to you? Add to that a deeply divided populace which the regime is egging on by playing off half the people as bad guys, thereby chasing away the best and most productive class, and I say No Thanks, we don't need that up here. All they seem to be accomplishing is spreading misery everywhere.

[naaman fletcher]

14. Even if I accept everything you say here is true:

Price controls always lead to shortages. It's first week Econ 101.

So, are the Chablvistas stupid or do they know full well what they are doing and don't care because it gives them political talking points?

It's one or the other when it comes to price controls.

[ocpagu]

15. It's funny how people always remember to blame governments for that...

... but always forget about the much more powerful forces behind it.

Goldman Sachs made $400 million in 2012 manipulating food commodities derivatives

[naaman fletcher]

16. That's a different story

You changed the subject.

I hate Goldman as much as the next person. The fact is that price controls lead to shortages. This is first week Econ 101.

[ocpagu]

17. Nope.

Same subject. Manipulation of food prices. Just pointing to you that you are 'forgetting' about a very important actor behind it: the private sector.

And it's not only Goldman Sachs. It was just an example.

Speculation and Criminal Manipulation of Food and Commodities Prices

[naaman fletcher]

18. I agree with you totally

About the manipulation of food prices.

However that has nothing to do with the fact that price controls cause shortages.

If Goldman and others increase the price of food is actually results in MORE production.

So of the issue was lots of product that nobody could afford then you would have a point.

That's not what is happening here. What is happening is literally the first week of Econ 101. Price controls cause shortages.

[Bacchus4.0]

19. right, he's trying to change the subject. We are talking about shortages

A country with vast oil and mineral wealth run into the ground over the last 15 years by corrupt and inept government. Venezuela cannot feed itself. There is insufficient domestic production and insufficent ability to import enough food to make up for the lack of domestic production. Well, I suppose if its Polar's fault then they might as well expropriate and watch the state work its magic.

I have noticed over the past several years a large increase in the price of chicken for example. I believe this is do to high production costs alot of which has to do with biofuel production versus feed production. Anyway, if I want to buy a $9.00 chicken I can but I normally choose not to.

Now if I know I have to wait 4 hrs to buy a bag of flour we are screwed.

[ocpagu]

20. How come "that has nothing to do with the fact that price controls cause shortages"?

The objective of price controls is precisely to fight the rising prices of food caused by speculation and manipulation of the private sector, easing the burden on citizens. That wouldn't be necessary if the food producers were not making money by playing with people's lives.

[naaman fletcher]

21. The objective has nothing to do with it

You can say what an objective is all you want. What matters though is reality. This is first week Econ 101. Price controls cause shortages.

If Goldman and others are manipulating food prices that sucks, but putting price controls on VZLA producers and didtributors has no impact in world food prices. All it does is cause shortages.

Again, this is FiRST WEEK Econ 101.

[Flatulo]

23. Oh, my...

"That wouldn't be necessary if the food producers were not making money by playing with people's lives."

If the food producers weren't making money, I'm sure they wouldn't bother producing food.

[ocpagu]

24. Oh, so you believe anyone who's willing to make money is allowed to speculate and manipulate prices?

n/t

[Flatulo]

28. How is the value of a thing determined? At the simplest level, it is the cost of the labor,

materials, marketing and distribution, plus a profit for the producer for his troubles. If the product has value added beyond that, such as cachet (think Apple stuff) and the market is willing to support the price, then the price will rise. If people cannot afford it or simply don't see the value, then they won't buy it and the price will fall, or a competitor will come along and make a comparable product for less.

I believe you're calling this manipulation, but it's how markets work.

Some items, like medicine, are more difficult to price. It may cost $2b to produce a unique new pharmaceutical that would never be sold in sufficient quantities to recover the R&D cost, yet the producer can't sell any at $5000 per tablet. What do they do then? I believe this is a special case, and the government may be justified in granting subsidies to the manufacturer to help them bring it to market.

But in commodities like energy and food staples, there are plenty of people who know how to raise cattle or poultry or grow grain or extract oil, so market forces tend to work. Now if a cartel forms for the purpose of fixing prices (like OPEC), then that is what I would call manipulation, because there is usually no competition outside of the cartel.

You seem to be in denial of the graphs linked above explaining supply and demand. May I ask what you see to be the flaw in the model? I mean, one can ignore it, turn all production over to the state and let them operate at a loss in perpetuity, but history has shown us that centrally controlled economies have chronic shortages. Always.

[Flatulo]

22. Are you claiming that commodities traders are causing shortages in VZ? Are they causing

shortages in other LA states?

[ocpagu]

25. They are manipulating prices...

...which caused Venezuela to establish prices controls.

[naaman fletcher]

26. So,

Every other country in the world must be suffering shortages as well?

[Flatulo]

27. Exactly my thoughts.

[joshcryer]

29. They don't care about the poor and it gives them talking points.

Hell, look at the response you got, dozens of completely deflected talking points that didn't address the meat of the matter.

[Bacchus4.0]

12. Polar rejects accusations that production has been reduced (Maduro lie #819,258)

The Polar president says "He assumes that the President is not well informed". Quite the understatement indeed. He says Polar produced 10% more this year than last in the 1st quarter. The state is 52% of the market. He says Polar is at 100% production whle the state and other private entities at 40%. He noted that the government requires authorization of shipments and 49% goes to Caracas. That is a government decision. He also said that the government is the only entity that imports corn so Polar is dependent on the government for delivering corn.

http://www.eluniversal.com/economia/130513/empresas-polar-rechaza-acusaciones-sobre-caida-deliberada-de-la-produc

Caracas.- El presidente de Empresas Polar, Lorenzo Mendoza, rechazó las acusaciones del Presidente Nicolás Maduro sobre la supuesta reducción de la producción por parte de esa industria. "Asumo y presumo que el Presidente no está bien informado", dijo el empresario durante una rueda de prensa.

Mendoza señaló que Empresas Polar produjo y vendió 10% más en el primer cuatrimestre con respecto a igual período del año pasado (15.000 toneladas adicionales), información que maneja el SADA. Agregó que se logró ese nivel, pese a los feriados, conflictos sindicales, cortes eléctricos y varias trabas más que enfrentaron durante ese período.

El empresario señaló que el arroz que producen tiene una participación de 21% en el mercado, la harina de maíz 48%, el aceite 11% y las pastas 35% de participación.

"No podemos escapar a la realidad de que es el Estado quien tiene 52% del mercado (de harina de maíz) (...) Produzcan y, si se produce, no hay ningún problema. Nosotros seguiremos produciendo a 100% de nuestra capacidad instalada. Los demás (Estado y otros privados) están produciendo a menos del 40% de su capacidad", dijo.

Sobre este producto, Mendoza señaló que Empresas Polar depende del maíz que le venda el Gobierno que es el único importador de

[Marksman_91]

30. Elías Jaua asks Polar to make a small "sacrifice" and produce at a loss to guarantee food supplies

The article is in Spanish, but I'll do my best to translate.

http://www.noticias24.com/venezuela/noticia/167915/jaua-lorenzo-mendoza-busca-chantajear-con-el-argumento-de-incapacidad-para-producir/

The chancellor of the republic, Elías Jaua Milano, established his position before the statement made by the executive president of Empresas Polar, Lorenzo Mendoza. He said that "we do not avoid the responsibility for what is happening, but he knows that he too has responsibility. He's trying to find an excuse with the argument that their economic structures don't provide enough to produce. If there were losses, they would have left Venezuela a while ago because supposedly this is the country where all businessmen operate at a loss, but yet all of them are very rich"

The chancellor considers that Polar can produce more, "that they can distribute more and cooperate with the supply, against the hoarding, and if they produce at a loss, we ask them that they make a small sacrifice, the same one they made near the end of 2002, when their production was stopped until January 2003. They can operate at a loss for a few weeks to guarantee that our people have the basic products"

He maintained that with unity, resolution, the mobilization of the people and the government spread out on the streets will overcome the current situation regarding the basic food shortage. "We're not interested in that Capriles recognizes the results, we just want that he complies with the people of Miranda as governor"

Jaua assured that the "consultation made by the majority fraction of the Legislative Council of Miranda, the one made to PSUV to clarify the current situation in the state of Miranda, doesn't seek more than to give an answer to the needs of the Mirandinos. We don't care that they don't recognize the election results. They didn't recognize the ones in the 2004 referendum, and there is still government today... He has responsibilities as governor and he must carry them out. We seek for him to govern in Miranda and that he attends the problems affecting the population"