Venezuela on Brink of Famine With Fuel Too Scarce to Sow Crops
(Bloomberg) -- Venezuelan farmer Roberto Latini fears his window to plant this year’s crop is quickly closing.
He’d hoped to seed corn, but couldn’t find the fuel to operate his trucks and equipment before the dry season ended. So he set his sights on rice, which can be planted even in heavy rains. Weeks later, fuel is still short and “as time goes by, it’s getting too late to sow,” Latini said.
After seven years of economic collapse, Venezuela’s crisis has entered a troubling new phase. In a nation that’s home to the world’s largest oil reserves, fuel shortages have grown so acute that fields are going bare.
Venezuela is now on the verge of famine, the International Crisis Group warns. More than half of the land used to grow vegetables last year won’t be replanted, according to farming federation Fedeagro. Corn production is expected to cover less than a quarter of national demand. And the tightening vice of U.S. sanctions threatens to strangle what little food and oil is getting in from abroad.
“We’ll start to see the consequences of this in the next few months,” Fedeagro President Aquiles Hopkins said. Already, “we’re eating vegetables that were planted two or three months ago, rice that was sowed six months ago and corn from the previous crop cycle.”
A shipment of oil from Iran that arrived late last month may have dented the dearth in Caracas, but farmers like Latini say they haven’t seen much evidence of it in the countryside. Latini, whose farm is located in the crop-growing hub of Turen, said his only option is to wait all day at a gas station -- the daily limit of 30 liters (7.9 gallons) isn’t nearly enough -- or shell out $4 a liter ($15 a gallon) on the black market.
To the northeast, corn grower Celso Fantinel said he hasn’t seen his fields in days. The price of fuel means he can’t afford to make the 220-mile round trip very often.
With the rainy season in that part of Venezuela still a month away, Fantinel aims to start planting his crop on Monday. But fuel and pesticide shortages, combined with a lack of credit, have forced him to scale back to just 300 hectares (741 acres) of corn, less than a third of what he used to sow.
Fantinel’s planting machines use diesel, which is exempt from U.S. sanctions, but still scarce and pricey. The cash-strapped state producer known as PDVSA can’t make or import enough of it.
“Without fuel, you can’t cover the daily needs of the farm,” Fantinel said. “If you have to bring in a technician from town, or a spare part, or even food for the workers, it’s impossible.”
Some 9.3 million Venezuelans, or a third of all people in the country, don’t have enough food to eat or are malnourished because of quantity and quality, according to a 2020 report from 16 organizations including United Nations agencies and the European Union.
Set to Get Worse
The years-long slide means only one out of six sugar mills are operating, while the milk and dairy industry is running at 12% capacity, and produce isn’t getting to distribution hubs, according to Fedeagro.
The situation is set to get worse, even as the government tries to ease the pain with $20 million in agricultural credit, while FAO‑Venezuela distributes fertilizers and seeds.
In recent years, the government has imported more than half the corn it needs, which is a staple in local diets and the key ingredient of a popular dish known as arepa. But with an all-but-worthless currency, dwindling foreign reserves and sanctions, it has had to get creative in reaching deals. Last year, it agreed to trade oil for corn and water trucks, but the Mexico firm on the other side of the accord has since gone bankrupt.
Meanwhile, the Trump administration is preparing sanctions on up to 50 oil and fuel tankers as part of an effort to cut off trade between Iran and Venezuela, according to a person familiar with the matter. And Covid-19 lock-downs in Colombia and Ecuador are prompting a flood of refugees to return home, boosting food demand.
Gerson Pabon said farmers in Tachira state, where he grows vegetables, regularly get their gas and pesticides from nearby Colombia. They pay international market rates for the inputs, then jack up the prices of their produce to reflect those costs.
Venezuelan food inflation reached 251% in the first four months of the year, according to Caracas research group Cenda. Corn production this season may come in at about 350,000 tons, compared with 450,000 tons in 2019, according to Fantinel, who is also the vice president at Fedeagro. Venezuela typically consumes 1.6 million tons.
The crisis isn’t only about the basic right to food, “but the right to quality and quantity,” said Carlos Machado-Allison, a professor at the IESA business school in Caracas. “It’s not just about having a daily arepa on tables, nor sufficient calories, but quality of life.”
©2020 Bloomberg L.P.