Growers did export sesame in some years—which is grown between rice plantings—as its price was not controlled . Yet, switching to non-controlled crops is often impractical for commercial growers as commercial and oilseeds producers evolved to primarily serve internal markets. Grower associations own a network of cereal and oilseeds storage and processing facilities that are reliant on continued grower production. This direct integration into national food processing and distribution reduces the commercial sector’s need to export crops in order to reproduce itself, and also requires that growers continue to supply their own porcessors. As government policy and oil rent redistribution programs have raised domestic demand for foodstuffs, commercial producers are well-linked to large internal markets. Due to the historical internal market focus of most commercial growers and the integration into agro-food processing chains, the sector benefits less from indirect subsidies from port and trade infrastructure than typically received by commercial agriculture in global South countries with strong agroexport sectors. The issue of prices for producers is also highlighted by the dynamics of food importation in Venezuela. Food imports in Venezuela have been steadily increasing since 2005 , partly as a government strategy to address rising consumption levels, food shortages and food price inflation. Although some food imports are attached to oil for food agreements with PetroCaribe countries,dutch bucket for tomatoes food imports from other trading partners are largely paid for at market rates.
This means that the Venezuelan government theoretically delivers higher prices to foreign growers than to domestic ones for some price-controlled crops, although prices paid by government importers is not made public. For example, in March of 2011, the international price for coffee reached a maximum price of 1,247 – 1,376 BsF per quintal depending on quality. The controlled price paid to domestic producers for the same time frame was almost half, at 595 – 747 BsF .A 2015 scandal concerning rice imports also uncovered even above market rates for crops being paid for by government importers. While the international price index was $407 per ton price for rice, reporters uncovered Venezuela was importing Argentine rice at $606.5 per ton from some suppliers . The opposite, however, can also be true. As food imports are bought with preferential dollars at the 6.3 BsF exchange rate, they can often be imported far below the domestic price. For example, in June 2015 a 501 kilogram bull imported from Brazil into Venezuela cost $1,450, which at the official exchange rate of 6.3 BsF is 9,135, BsF, or 18.23 BsF per kilogram . A domestically produced bull sold at the controlled price of 82 BsF per kilogram would cost 41,082 BsF, over three times as much . Profit from cheaper food imports through these mechanisms are captured by importers, not producers. The price dynamics of food imports illustrate that government policy to keep food prices low and increase availability incentivizes imports over domestic production. Yet benefits to the public from imports are limited. As foodstuffs are sold at the controlled price, not below, consumers receive no price relief from this class of imports. Food imported with dollars obtained from the central bank at the most preferential rate of 6.3 bolívars also creates incentives for food diversion to Colombia or to the black market where the products command prices high above controlled prices found in official markets .
This contributes to scarcity of food items in supermarkets.The Chavista government has always advanced an economic framework that is explicitly a mixed-economy model, even if the state’s discursive focus is on the socialist aspects of policy. This highlights a fallacy in literature on Venezuela that conceptualizes the limits of state reform as primarily indicative of class conflict or bureaucratic growing pains of socialist revolution. Taking into account the socioeconomic realities of Venezuela’s mixed economy, the maintenance of the commercial agriculture sector emerges as a feature, not a bug, of economic policy. The Venezuelan’s government focus on raising production levels as a principal goal in the agrarian sector has contributed to the implementation of a number of policies whose benefits are largely captured by commercial producers. This focus on productivity is both politically strategic and structural. Given the state’s emphasis on food sovereignty, the optics of supermarket queues and food shortages are particularly problematic for the government. Ensuring the productive capacity of the agro-food system—especially the flow of raw inputs into agroindustry—is of key importance for the government. The productionist slant to state policy has provided a buffer for the commercial agriculture sector from the redistributive aspects of the agrarian reform. The commercial sector has been relatively strengthened vis á vis the peasantry despite the agrarian reform sector’s continued centrality to the rhetoric of socialist revolution and of agricultural policy. The issues of food price inflation and scarcity continue to play a central role in opposition-government debates over socio-economic policy. State interventions in land and other links of the agro-food chain are cited by agricultural interests as the principal drivers of scarcity and the high growth rate of food prices.
High volumes of food imports are characterized by government critics as symptomatic of agricultural policy failure and general mismanagement of an economy headed towards fiscal and productive collapse . Government supporters counter that scarcity is a product of ‘economic warfare’ where commercial interests withhold products from the formal market as a tool of political leverage or divert price-controlled goods to the black market or to neighboring countries where they command far higher prices . This frame of an economic war reinforces the anti-elite discourse of the Chavista government. As Gates argues, the anti-capitalist rhetoric of Chavismo contributes to the complaints of business elites over government intervention in the capitalist sector being perceived by the base as a keeping of promises made by a socialist government. Gates notes that Chávez came to power in 1988 largely due to an anti-business discourse that was more popular than even his anti-poverty and anti-neoliberalism rhetoric. The deep public mistrust of business leaders and their perceived corrupt access to the state meant that commercial elites’ hostility to the Chavista government demonstrated to supporters that Chavismo was fulfilling promises to upend corrupt collusion between the government and powerful economic actors Food shortages play into the government’s political narrative where elites are strategically destabilizing the economy. However, Venezuela’s worsening macroeconomic woes are, at the time of this writing, increasingly testing this line of state discourse. The tight electoral climate and its implications for continued popular support at the polls, which has long been central to the rhetorical framing of the revolution’s legitimacy,blueberry grow pot reinforces the government’s incentive to both focus agro-food policy on production and maintain the commercial agro-food sector. It is instructive here to raise Block’s argument that policy makers in capitalist states tend to accommodate the long-term needs of capital—even as some policies attack short-term interests of the business sector—in order to ensure macroeconomic stability critical to the maintenance of political power. Block argues that economic stability is necessary for the state to reproduce itself as the government relies on taxation from the capitalist sector to finance expenditures. Apart from the revenue to states originating in the capitalist sector, governments are electorally vulnerable to the social fallout of disruption to the economy . Public support for the ruling party will suffer in times of economic decline, reinforcing the state’s incentives to maintain the long-term stability of elite business sectors. Venezuela’s context of petro-socialism expands Block’s argument. Block was writing about capitalist states, but the concepts continue to fit with Venezuela’s mixed-economy model.
As a petro-state, tax revenue is relatively inconsequential to reproduction of the state as government finances stem from rent from the state-owned oil reserves. Yet this does not free the state from reliance on its capitalist sector. Although nationalized, the national oil industry continues to operate as a state-capitalist sector and requires much of the capital it produces to be reinvested in petroleum operations. In the agro-food sector, the almost nil contribution of agriculture to Venezuela’s export sector or GDP , illustrates an additional petro-state twist to the argument on the necessity of states working in the interests of capital. Maintaining agricultural export revenue for foreign exchange is not a concern for Venezuela as it was and is in other cases of land reform in the global South where economies were dependent on the agro-export sector for foreign exchange. Yet, this does not necessarily translate to the easing of overall barriers for agrarian reform. In the agro-food sector, the need to maintain a measure of stability in the food system contributes to state policy that reproduces, rather than replaces, commercial agriculture. The dominance of oil in Venezuela’s economy and the state’s reliance on agro-imports to meet domestic consumption needs reinforce incentives to avoid any serious disruption of relations of production that support commercial agriculture. In terms of short-term disruption to the capitalist sector, the persistent issue of prices in both commercial growers and peasants34 is indicative of a classic ‘urban bias’ problem. The goal of providing low food prices for urban consumers, where the majority of industry and votes for governing officials are located, squeezes rural producers. As Bates argued about postcolonial African states, food and agricultural policy is a byproduct of political relations. That is, governments intervene in markets to secure a mix of social, economic and political goals, or to use the terminology of this thesis, policy processes have both capital accumulation and political legitimation functions. The need to maintain accessible food in urban sectors creates incentives to clamp down on prices, even though low prices hurt agricultural producers. States employ non-price strategies that compensate producers for low price policies including subsidized credit, cheap inputs, and access to land . In Bates’ reading this support is captured by larger, well connected farmers who then often evolve into sectoral elites . Many of these non-price policies have been used by the Venezuelan government in attempts to simultaneously boost agricultural production and provide cheap food to the populace. This dual farm-support/cheap food strategy is especially attractive to policymakers in a petro-state context, as oil revenue facilitates significant rent redistribution into both the agrarian reform and commercial agriculture sectors. The nature of oil rent distribution shapes state intervention in the economy. The redistribution of rent into the domestic economy tends to take the forms of cheap credit, overvalued currency to facilitate purchase of foreign inputs, price controls to stimulate domestic consumption, and market protections for domestic industry . Chavista agrarian policy largely follows this oil-rent distribution model. The state mandates that commercial banks deliver below market rates to the agricultural sector.An overvalued bolívar facilitates the importation of machinery and inputs, and access to preferential dollars subsidizes production and consumption. The commercial sector’s ability to accumulate capital partly through oil rent capture demonstrates that even in a context of agricultural policies that increase resource flows to the peasantry, historical socioeconomic relations can persist. Through these lenses, the contradictions of state policy towards commercial agriculture become clear. State policymakers ‘need’ to minimize disruption to agricultural production, even as agrarian reform is necessary to secure an important form of legitimation for a ‘socialist’, pro-poor state. The perceived failures of the agrarian reform sector in productive terms, reinforces the state’s need to maintain the commercial agriculture sector, as the output of the reform sector cannot displace commercial production. Their strategic importance for the state means that large commercial producers are largely shielded from the redistributive aspect of the agrarian reform. Accommodations with the commercial sector can be interpreted in this light. Government policies provide for the reproduction of sectors of commercial agriculture—even if they are openly aligned with the political opposition—in order to maintain a measure of stability in the food system and to ensure that goods reach markets. This is true even though some state policies work against the short-term interests of the sector. So while price controls tend to hurt commercial producers, cheap credit and other policies prop up producers and allow for medium to long-term reproduction of the commercial sector. As the structure of oil rent dynamics facilitate continued accumulation of commercial producers, the sector is relatively strengthened vis á vis the agrarian reform and peasant sector. That is, the commercial sector captures ‘benefits’ from the structural nature of ‘sowing the oil’, impeding other proclaimed government goals of breaking landowner power and establishing the agrarian reform sector as the basis for agricultural development.