12:18 AM May 11, 1996
VENEZUELA: FOOD SHORTAGE
Producers from five agricultural and two fishing regions started protests over the impact of the new diesel prices - a fuel used in tractors, launches and water pumps on wells. One in every 10 of the thousands of food lorries, which travel towards Caracas every day - equipped with a diesel or petrol engine - turns off to go to cities nearer to the areas of agricultural production, affecting both prices and the state of supplies in the capital. The 500 transporters of kerosene and petrol in the capital region are threatening to halt their supplies to retailers, boiler-rooms and workshops, as a protest against the small profit margin allowed them by the state petrol company. Since they increased fuel prices on April 16, the owners of some 176,000 delivery trucks went on a go-slow until the clients would accept new transport charges. The government increased petrol prices by an average of 10 to 55 bolivars per litre (12 US cents), and diesel from 4.2 to 48 bolivars (10 US cents). The increase in fuel prices and a linear devaluation of 70 percent are the most visible measures of an adjustment programme, which also includes higher taxes, the freeing of interest rates, free trade and the removal of price controls and tariffs. The programme aims to wipe out the fiscal deficit and to knock down inflation from the second semester of 1996. It was accepted by the International Monetary Fund and has 14 plans to help the poorest sectors to survive. President Rrafael Caldera avoided making the adjustment for years, supporting the subsidy on fuel with arguments on its multiplying effect on the price chain, but accepted a near six-fold increase in its sale value when he ordered the adjustments. Three weeks later, the State controlled Venezuelan Petroleum (PDVSA), with a monopoly on fuel production and sale, studied measures to ease the burden on petrol users. "Its a matter of relieving the elevated costs, which for the agricultural and fishing sectors represents having increased the diesel fuel prices by 1,042 percent," said PDVSA president Luis Giusti. Rural businessman Conception Quijada gave the example of the centre-west "Venezuelan granary" rice region, where irrigation is carried out by oil-powered pumps. "For this reason alone the cost of producing a kilo of rice has gone up by four US cents (costing the consumer 40 cents), and this is without adding the fuel for the tractor which prepares the ground and the lorry which takes the product," said Quijada. The deep-sea and traditional fishing workers also warned of the impact of the petrol prices on their work, while fish in the Caracas market has increased in price by between 30 and 100 percent. Farmers in various provinces have started to delay their deliveries, demanding that the foreseeable extra costs from fuel and other provisions be considered for the following harvests. In Venezuela agriculture and livestock raising work on credit, with agro-industrial plants, which make a commitment to buy from the producers at prices decided beforehand by the government, and the banks are also obliged to grant loans at rates more favourable than normal. Hiram Gaviria, leader of the federation of agricultural companies, made a public call to his colleague Zeliah Carrasco of the livestock raising organisation, to take joint action against the official measures, and a strike is on the horizon. Giusti and others responsible for the economy admitted that measures for discounts for bulk fuel users are being considered, along with credit for the companies and adjustments to the tables of agricultural prices. But the motion that is most rapidly gaining support is that of reducing petrol to less than half its current price -to around US five cents per litre - and to start gradual increases again in the second semester. Once this option was confirmed, the fuel prices would control the speed of adjustment and the field would be open to gradual rectifications in sharp contrast with the past few weeks of shock tactics.