Sunday, January 08, 2006

Chavez and Coffee

Producers "are hoarding coffee, waiting for me to raise the official price, but I won't raise it," said Chavez, speaking to pro-government lawmakers. "If they don't want to roast the coffee in the roasting facilities they have, we will take the roasters ... we will nationalize them."
Coffee crisis brews in Venezuela over state's price limits

Obviously the most relevant fact here, to sort out who is bullshitting whom, is whether the regulation is in fact impossible to comply with. The coffee corporations are claiming, apparently, that their cost is one cent more per pound than the regulated selling price. That seems awfully convenient-- one has to wonder, for instance, is there a multimillion dollar CEO salary that figures into those "costs"? On the other hand, if it's true, then the Chavez administration is on the face of it making unreasonable demands.

What would help here is if I could turn to some sort of unbiased news source, dedicated to finding out the actual facts of the matter. I want to know, what are the expenses of roasting coffee in Venezuela? What is the economic state of the companies in question-- how long will it take them to go bankrupt if they really do lose one cent per pound of coffee? Is this a mortal wound or a pinprick? Alas, every bit of the Venezuelan media is (so far as I know) utterly untrustworthy.

The last few weeks there have been shortages of coffee and this week a Government official suggested an increase in the controlled price was imminent, which led to even more scarcity. Then on Wednesday the consumer protection agency (Indecu) impounded 300 Tons of coffee at the distributor’s warehouses and two additional raids have taken place. The coffee will be forcefully purchased at the official controlled price.
Chavilarism: When people lose their property rights to their crops and buildings

Aha, this is starting to make a little more sense to me. They're going to adjust the price, so nobody wants to sell now at a loss rather than wait it out.

It seems like a complicated question. Obviously there's been some mishandling of the market, some bureaucratic sluggishness, yet on the other hand the inability of corporations to act unselfishly is one of the root causes here.




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