Food is cheap in Venezuela and some people even get it for free. Its made possible through government established price controls. Price controls were established a few years ago to safeguard the poor, but it seems that now they are achieving just the opposite – they are hurting, not helping the poor. As the country’s farmers are protesting against price controls, Ramon Bolotin, president of an independent agricultural producers association from Portuguesa state, takes a critical look at the current state of affairs:
…the price controls were not working because, while the prices at which they sell their produce to distributors have remained largely unchanged for two years, the cost of production has increased, including the price of transport, insecticides and seeds. Producers were being forced to lay off workers and default on bank interest payments…
Also,
Peter Kornett, another producer from Portuguesa, said more than one million tons of corn — about 60 percent of domestic corn production — remain in silos across the country because producers are refusing to sell at loss. Those stocks were accruing storage costs of 7 billion bolivars (US$3.26 million; euro2.73 million) monthly, he said.
Indeed, there is no such a thing as free lunch. Price controls hurt the poor by causing reductions in production and putting farmers out of business. Of course, the government can just listen to its entrepreneurs and let markets get the food on people’s tables.
Published Date: February 27, 2006