"Controls are necessary, but they should be revised"
"Each product should be assessed, including the production chain, and the relevant revision should be conducted." "Controls can be good as long as there is constant and harmonic monitoring"
Although positive results were achieved in 2012 with respect to the previous year, in Venezuela the agriculture output rate continues below the level recorded in 2007.
In an interview, the chairman of the Venezuelan National Farmers' Federation (Fedeagro), Pedro Rivas, remarked that price regulations have always existed. However, he added, controls are among the major forces limiting agriculture production. He believes price surveillance is necessary, but in parallel with adequate reviews of agriculture-related costs.
-Price controls have been in force for 10 years in Venezuela. What have been the effects of this policy on agriculture?
-We have always faced regulations and price controls, particularly on grains. Earlier, a policy of minimum and maximum prices was implemented, under which the industrial sector, based on the price imposed on them, set the prices paid to farmers. Today, the prices paid to farmers fail to fulfill their expectations. They barely cover production costs. Production costs and, end product costs and prices paid to producers need to be revised on a constant basis. Controls should remain in place, but they should go hand in hand with constant revisions of the cost structure.
-Fedeagro has reported a loss in profitability in the agriculture sector. Is this a result of controls?
-At first, it was not. Despite the enforcement of controls in 2003, substantial growth was reported from 2000-2007. Other issues emerged in addition to price controls. Regulations on some products are necessary, but they must be subject to constant revisions so as to avoid speculation.
-In addition to a revision of costs, what do farmers expect from the regulations?
-Each product should be assessed, including the production chain, and the relevant revision should be conducted, yet this should be done without harassment (...) Talks are necessary in order to set fair prices, without speculation in any sector: primary, industrial, or trade. Controls can be good as long as there is constant and harmonic monitoring.
-Devaluation has just been implemented. What are the effects on costs and final prices?
-The Ministry of Agriculture shall define the price for agrochemicals. There is some flexibility on the sales of US dollars already approved (at VEB 4.30 per US dollar). New products will be imported based on an exchange rate of VEB 6.30 (per US dollar). Obviously, this will hit production cost and require general adjustments in the whole producton chain.
Translated by Jhean Cabrera
Cristian Fonseca, a businessman in La Candelaria district downtown Caracas, was doing the accounts in his small shop office on Sunday December 21, 2008. The Christmas shopping season kept him working late hours into the night. It was around 11 p.m. and his phone rang. A friend broke the bad news to him over the telephone.