VENEZUELA: Farmers Protest End Of Protectionism

By Estrella Gutiérrez Reprint | | Print |

Estrella Gutierrez

CARACAS, Aug 23 1997 (IPS) - Angry farmers, protesting at the lifting of protectionist measures on their produce, planned more demonstrations Thursday with a symbolic takeover of the docks at Puerto Cabello – the main entry port for agricultural imports.

Some 60,000 farmers turned out Tuesday in demonstrations in a number of states where agriculture forms the basis of the economy. They blocked a bridge across Lake Maracibo in western Venezuala causing a long tailback of road transport.

Leading the protesters, former agriculture minister Hiram Gaviria, attacked the reluctance of agri-business concerns to buy from local farmers, preferring to import cheaper produce.

Gaviria said that in the past decade, agricultural prices had risen much less than those of processed products, but still the government went ahead with its plans to end financial support to the agricultural sector.

Agribusiness leader Cesar Croce said his aim was to “collaborate with consumers, because they cannot continue paying the exaggerated prices imposed by an agricultural system which remains insufficient in spite of the greatprotectionism it has enjoyed.”

He cited the case of corn where the government had set a minimum price of three dollars a kilo, but producers were willing to sell it at a cheaper price and corn was also available at lower prices on the foreign market.

Agriculture Minister Raul Alegrett has also outraged the agricultural associations for dismantling several protectionist measures, in spite of the official’s promotion of new agricultural legislations that is favourable to producers.

Venezuela, a country of 22 million people, has about 380,000 farmers and ranchers – 240,000 of whom operate landholdings of less than five hectares, the Director of the Ministry of Agriculture, Luis Arias, told IPS.

Although the country’s economy is based on oil exports, 14 of the 2 states are dependent on agriculture and rural development, he added pointing out that, until the 1940’s, agriculture – particularly coffee and cocao, formed the bulk of exports before oil took over.

The agricultural sector traditionally has enjoyed a high level of protection from the state, including low-interest financing to which all banks were obliged to dedicate 18 percent of their portfolios. Under the government of Jaime Lusinchi (1984-89), borders were even closed to outside agricultural produce, which led to a false “agricultural miracle” which disappeared as soon as there was a partial opening up of markets went Lusinchi left office. Inefficient production methods coupled with intermediaries and processors working as cartels kept food prices far higher than those of industrialised countries.

Minister Alegrett, contradicting Gaviria, maintainedg that the agricultural sector would grow five percent this year, one percent higher than the level of growth foreseen for the economy as a whole. He also criticised agri-business for not respecting the minimum prices set for the purchase of products, and cited specific problems such as a 40 percent drop in food consumption so far this year due to a fall in real incomes and constant price rises in the sector.

Alegrett argued that the government must obey the rules of the World Trade Organisation, and the liberalisation accords made with other Latin American countries and blocs, despite the fact Venezuela has held its agriculture sector partially, or wholly, on the margin of such commitments.

Gaviria, president of the Agricultural Federation (Fedeagro) accused the government of Rafael Caldera of favouring imports and said that in the first two years of the current administration, its agriculture policy had been based on a failed model of rigid monetary controls and purchases abroad.

According to Fedeagro, in the years 1986-1996 the price of corn paid to producers rose fifteen-fold while the cost of flour was multiplied by 28, milk prices by 34.6, and pasteurised milk prices by 43.

Gaviria said that in 1986, during the “false miracle,” cultivated land in the country totalled 2.2 million hectares, compared to the 1.4 million hectares under cultivation last year.

The president of the Central Bank, Antonio Casas, meanwhile, argued that the financial sector could not be held responsible for compensating agriculture’s low profitability. So far this year, he reported, banks had shelled out nearly one billion dollars in agricultural loans at 85 percent of the going rate.

The elimination of preferential treatment for farmers should not have caused any suprise, Casas said. The commitment had been made to the International Monetary Fund (IMF) as at of an agreement to extend a loan accrod of April 1986.

Bankers said earmarking 18 percent of loans to the agriculture sector meant a direct annual subsidy to farmers of 300 million dollars and it underlined the fact that in spite of preferential treatment, agriculture only accounted for 6.2 percent of the non- petroleum Gross Domestic Product over the past 20 years.

Venezuela’s political parties overwhelmingly back agricultural producers against a government which they say has turned a deaf ear to their demands and abandoned the countryside. But the leftist Movement towards Socialism argued that if the sector did not learn to compete in today’s new globalised economy, it would have no future.