Rationing to begin in Venezuelan state

Associated Press

CARACAS, Venezuela (AP) — In a sign Venezuela's food shortages could be worsening, restrictions on the sale of 20 basic items including toilet paper and chicken subject to price controls are set to begin next week in its most populous state, officials said Tuesday.

A national government spokesman said it is incorrect to call the plan rationing because its intent is to fight contraband on the Colombian border. He said there are no plans to extend the program nationally.

How exactly the system in Zulia state will work is still being determined, said Blagdimir Labrador, the state governor's chief of staff. The spokesman said details are still being worked out.

Zulia will issue computer chip cards beginning next week that will limit consumer purchases of products that will also include rice, flour, cooking oil, sugar and powdered milk, he said. The quantities each family will be allowed to buy, on a daily or weekly basis, have not yet been determined and will be set by the time the scheme is implemented, Labrador added.

The system will register purchases remotely on computer servers "so the same person can't go to a different store on the same day and purchase the same product," he said.

It appears to be the first time food has been rationed in Venezuela. Communist-run Cuba has issued monthly ration cards for basic foodstuffs for decades, though the number of items has dwindled in recent years.

Labrador said that to begin with, the system will apply to 65 supermarkets in two cities, Maracaibo and San Francisco, in the state bordering Colombia.

It was unclear, however, how the system would prevent different members from the same family from beating the system through separate purchases.

Authorities said the measure was a response to food-smuggling to neighboring Colombia.

"I am prepared to talk all the risks with this to defeat the scourge of food contraband," Gov. Francisco Arias of the ruling socialist party said Tuesday via Twitter.

"This is only in Zulia state and it is not rationing," said Information Ministry spokesman Raimundo Urrechaga. "It focused only on Zulia, to control contraband."

To fight gasoline-smuggling to Colombia, Zulia and another border state, Tachira, have imposed in the past two years a computer-chip system for gasoline purchases. It does not appear to have stemmed the cross-border smuggling of heavily-subsidized Venezuelan gasoline.

Many economists are similarly skeptical that limiting food purchases, or rationing, can end worsening shortages of basic foodstuffs that Venezuelans generally blame on government mismanagement.

For one, price controls for more than 100 items imposed more than a decade ago under the late President Hugo Chavez are regularly ignored in all but state-run markets. Merchants say adhering to them would be suicidal for their businesses given inflation that reached a 29.4 percent annual rate in April.

Venezuela competes with Argentina in the Americas among major nations for the dubious distinction of most troubled economy. In both nations, currency controls and a deepening shortage of dollars are widely blamed for economic turmoil.

An economist at Andres Bello University, Ronald Balza, said he doesn't see how rationing certain foodstuffs can address what is causing shortages.

"The reason for shortages (in Zulia) is the same as it is in the rest of the country: fixed prices, supply problems and the preventative purchases that consumers make every time new prices are coming."

The Venezuelan Central Bank's shortage index in April was 21.3 percent — the portion of a basket of more than 100 items sought on store shelves, but unavailable. That's the highest it's been since the bank began publishing it in 2009.

At the same time, some economists say Venezuela is heading into a recession. The Central Bank said its economy grew at just 0.7 percent in the first quarter as capital inflows were choked, hurting domestic production.

Finance Minister Nelson Merentes said last week that he would travel to The United States and Europe to seek investment to try to shore up a deficit of dollars. He did not disclose the size of the deficit.

The bulk of Venezuela's $26 billion in international reserves as of May 10 were in gold and other monetary instruments with less than $3 billion in cash available, according to analyst estimates.

Opposition economists accuse Chavez of looting the Treasury in order to spread largesse and win re-election last October.

His hand-picked heir, Nicolas Maduro, won a snap election after Chavez's death to cancer in March by a margin of just 1.5 percent.