Food Markets in Caracas Empty Out as Inflation Hits the Poorest
(Bloomberg) -- In a country suffering what’s considered the Western Hemisphere’s worst humanitarian crisis, Venezuela’s pain is hitting a new order of magnitude as the food markets of Caracas turn into ghost towns.
At Guaicaipuro, near downtown, the long hallways of stalls seem to stretch endlessly with hardly a shopper in sight. At Quinta Crespo, food sellers are desperate to attract attention, screaming over each other every time someone walks by. At San Martin market, on the city’s west side, some stalls are shuttered, while some have so little food, they might as well have also closed. Others have decent supplies, but high price tags mean would-be customers mostly just walk away. Business is so scant some hawkers can’t even be bothered -- they just sit at their posts, playing on their phones, with no expectations for the day.
Even as there are emerging signs that Venezuela’s economy may finally have hit bottom, the green shoots come on top of decades of a swelling gap between rich and poor that still leaves millions in the country extremely vulnerable. The empty markets of Caracas are one of the stunning examples of that gap, as access to fresh and affordable food gets squeezed.
There’s no dearth of causes behind rampant food inflation in the country, but the most acute issue now are fuel shortages that have deepened the problems.
In Venezuela, home to the world’s largest oil reserves, fuel scarcity has gotten so acute it’s crippled the economy, forced factories to shut and left drivers lining up for hours to fill up their tanks. The tightening vice of U.S. sanctions has strangled what supplies come in from abroad, and now a lack of diesel is snarling just about every aspect of the food-supply chain.
Farmers don’t have enough fuel to use the machinery they need to plant and tend to crops. What little is grown in the far-west Andean region, the heart of production, then has to get trucked some 12 hours or more to the capital city. Fuel is so expensive that transportation costs alone can push up the price of greens by 200%, said Gerson Pabon, director of Fedeagro, a large food producers’ association.
By the time shipments of spinach or potatoes reach stalls like the one run at Quinta Crespo market by Roberto Fernandez, prices are so high that his customers can hardly afford to eat.
“People used to buy by the kilo. Now, they take just two, three items,” Fernandez said, adding that his sales have been cut in half this year. “The drop in consumption is masking the lower supply of food.”
Adding to the pain is the the ad hoc dollarization of the local economy. While that’s nominally helped to keep inflation in check, it’s of little relief to the country’s poorest who primarily have access to the bolivar, which has continued its massive spiral lower.
The country’s Oil Ministry and the Food Ministry didn’t reply to requests for comment sent through the Information Ministry.
A kilogram (2.2 pounds) of tomatoes can fetch $1.50. Potatoes and carrots are about the same, while peppers can reach almost $2. That’s a tremendous cost when you consider that an average worker makes around $55.50 a month, according to a February report by local analysis firm Anova, sponsored by the Inter-American Development Bank. Meanwhile retirees, common customers at the municipal food markets, receive a monthly pension equivalent to less than $3.
Seven years of economic collapse have sent Venezuela down a painful path of dysfunction and disarray. Hunger is so pervasive in this once wealthy nation that the country has been teetering on the brink of full-fledged famine, the United Nations’ World Food Programme has warned. The fallout from Covid-19 has likely pushed the problem well beyond the levels of 2019, when about 9.3 million Venezuelans didn’t have enough to eat, according to the group.
Until now, Caracas was often shielded from the worst of the crisis. The capital city’s markets were like small islands of respite, supplying the poor and working class with fresh produce, meat and dairy. Now that last sanctuary of relief is disappearing amid spiraling food inflation.
Marisol Mendez spent a recent Wednesday morning at San Martin market in search of vegetables. As the economy became dollarized over the past year, her salary, a mix of greenbacks and bolivars, has bought her less and less at the market where she’s shopped for 28 years. She used to buy tomatoes and potatoes, 2 kilograms at a time. Now she’s lucky if she comes home with even half a kilo. On this day, she was leaving empty-handed.
“I practically gave up meat, deli, and dairy. I buy much less vegetables. The vegetables are expensive here,” said Mendez, a 60-year-old manager at a food-distribution company that supplies some of the market’s stalls.
Instead of fresh food, many Caraquenos are instead relying on a mix of carbs and processed food to stave off hunger.
“The Venezuelan’s diet is very monotonous,” said Marianella Herrera, a nutritionist and professor at the Central University’s Center of Development Studies.
“We are creating a breeding ground for chronic diseases such as diabetes, heart conditions, poverty-related obesity and food insecurity, even some types of cancer.”
Of course, the picture is different for the wealthy, who often earn in dollars or receive remittances from family abroad. The city’s richest and plugged in can visit upscale food stores where the shelves are packed -- and they also find ways to fill their tanks.
But for the poor, food inflation hits hard. In just the month of May, food costs surged 22%, while prices for fruits and vegetables saw a 31% increase, according to Caracas research group Cenda. Still, even price acceleration at that level is down from what was seen in the past. A year earlier, food costs had surged almost 30%, while in May 2018 they were up 84% from the previous month.
In a recent rare interview, Tareck El Aissami, Venezuela’s oil minister, said fuel lines will disappear as the country’s crude output quadruples by year-end. But that vision is so optimistic that it strains credulity, especially as the country faces some the toughest economic sanctions ever imposed.
The diesel shortages mean food output in the Andean region has dropped 85% this year, according to Pabon of Fedeagro. The trucks that transport what is produced are typically forced to pay for fuel on the black market, where carriers are often shelling out $3 for a liter ($11 a gallon). That cost becomes even more enormous when you try to calculate in bolivars.
“Suppliers at the wholesale market say they pay for diesel in U.S. dollars, so they charge us in dollars,” said 68-year-old Luisa Hidalgo, who runs a food stall at San Martin market. Her wares have been reduced to mostly plantains and sweet chili peppers. But it could be worse.
“We don’t get many dollars in this part of the city,” she said. “That’s why my neighbor closed. He couldn’t afford to restock.”
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