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Wrong Policies Caused Food Crisis in Venezuela: Inflation, Urbanization and Food Shortgage

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Around 9.3 million Venezuelans, 32% of the total population, are food insecure and are in need of assistance. Of these, 2.3 million are considered severely food insecure and 7 million are moderately food insecure. The majority of Venezuelans (60 percent) are marginally food secure, meaning they have acceptable food consumption, although, over ⅔ of the population engage within hunger-coping strategies and 98% are unable to afford many essential food items. The causes of Venezuela’s food crisis are commonly divided into two, firstly the economic mismanagement from Hugo Chavez and his successor, Nicholas Maduro has led the nation of Venezuela to a state of deterioration; from its dependence on oil exports to extreme overspending and ultimately resulting in skyrocketing inflation rates. Furthermore, the corruption laying deep beneath Venezuela’s welfare programs and political infrastructure not only cause the lack of food source for the population but push individuals to extreme measures in order to gain a profit or revenue.

Primarily, being home to the world’s largest oil revenues, ever since the discovery of oil streams in 1900; The Venezuelan government has forever utilized oil within its international trade, being the source of 95% of its total exports across the globe. During the years of 1972-2013, the production of oil brought in a large stream of income for the nation making it the wealthiest country in all of South America, its population was able to experience a high-end posh life, with a per capita GDP 3 times greater than its neighboring countries; Brazil and Colombia. After ignoring many warnings from his fellow business advisers, Venezuela’s former president, Hugo Chavez, and his congress overspent within a variety of social programs (mainly focusing upon social justice, social welfare, anti-poverty, education, health care and military recruiting), taking into no account of saving for the country’s near future. As expected, In the later months of 2014, Venezuela’s gross domestic product (oil) plummeted more than America’s during the great depression. That year, the price of an oil barrel, most commonly seen at $100 to $125, suddenly dropped to $70, further continuing to plummet to $33 in the early months of 2016. With a lack of money and support to fall back upon; Venezuela was left with a 33 billion foreign debt (22 billion was owed to private banks or financial sources), and it’s then 32 million population without an appropriate source of food and its hospitals starved of necessary resources, The Pharmaceutical Federation of Venezuela estimated in April 2018 that there was a shortage of more than 85 percent of medications with hospitals short about 50 percent of necessary medical supplies. A majority 70 percent of hospitals have reported power outages and a lack of available drinking water; 25 percent had no water at all in 2018 and the situation has continued to deteriorate. There is a severe lack of medical staff with 55 percent resigning or leaving the country. Additionally, to the closure of many oil revenues all over Venezuela, more than a third of the population experienced job losses thus a total loss of income for their families. For the remaining workers, the average price for a family food basket was valued at $164.09 since May 2020 and the minimum monthly wage continues to decline, almost equivalent to almost USD 3.61 since of July 2020, this covers less than 1.7% of the basic food basket, (rice, beans, vegetables, fruits and protein).Venezuela’s lack of effort to diversify its economy slowly lead to its downfall, relying only upon oil to drive its economy forward and funding its country’s social programs.

Although the fall of Venezuela’s economy did not deter the government's spending on international imports and welfare programs, this lead the country into deficit spending. It is a major cause of the increasing inflation within Venezuela, as the further the nation falls into debt, the more the value of their currency, the bolívar, plummets. Since of July 2020, Venezuela’s debt exceeds the revenue gained by the country’s exports by 738%. Therefore, taking into account the country’s substantial debt, the U.S placed down trade restrictions in the early months of 2019, although this restriction has further decreased the country’s exports and its gross revenue.

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According to Nicholas Maduro, the solution to beating inflation within Venezuela was to print more money. In 2018, The president lopped of five zeros, of the bolivar. He issued a new round of notes with the largest note being the VES 500 note, worth 50 million bolivars (8 US dollars.) Mr Maduro stated that “the new bolívar will be pegged to the petro, a state-run cryptocurrency which I launched earlier this year.” He also stated that ‘3,600 new bolívars will be given to the petro, therefore making the petro worth 60 U.S Dollars.” But as economists have pointed out, lopping five zeros off the currency didn’t halt hyperinflation, as by adding to the already immense supply of currency, it devalues itself, for Venezuela by 95 or 96%, and as prices continued to skyrocket, the government continued to print for notes thus creating a cycle of hyperinflation, which mainly affect the lowest of the lowest. For instance, on January 12th, 2020, Venezuela’s president, Nicholas Maduro, boosted the average salary by 67%, to 250,000 bolivars or $3.61 U.S. dollars per hour, and bonus 200,000 bolivars in order to aid the struggles of hyperinflation. Unfortunately, due to the inflation effect upon many food products, to afford 1 kg of beef, workers would have to save their earning completely for 6 months, in comparison to the US, where a month of the minimum wage ($7.25 per hour) buys 137 kg of ground beef and even the UK, At a minimum wage of £8.21 per hour, workers can earn enough to buy 288 kg of rump steak, in a month. Overall, consumer prices are expected to rise by 72,000% over the remaining months of 2020, this reduces the access to food, medicine and other goods, which are hampered by the U.S import restrictions. In recent years, malnutrition has reached emergency thresholds within Venezuela for children under 5, with 50% exhibiting some degree of malnutrition and some 280,000 at risk of death due to undernourishment. Pregnant women and people in impoverished parts of the country are also more vulnerable to malnutrition.”

Poor policy infrastructure is another major cause of Venezuela’s food crisis, most apparently “the land act”, a policy passed by Hugo Chavez in 2001. The system would allow the equal distribution of land among Venuzela’s farmers, thus resulting in maximum production of agricultural goods for a lower cost to the public. Although the president lacked to foresee the probable conflict between landowners and peasant farmers over the amount of land and vital resources (water source, crop seeds or cattle) distributed to each farmer. Between the years of 2001-2010, this conflict eventually led to the death of 200 farmers. Additionally, within the early years of “The Land Act”, a majority of Venezuela’s population relocated to more urbanized areas to obtain employment and receive access to cheaper supermarket goods, therefore, all across the country agricultural productivity decreased and caused a shortage of fresh produce within the supermarket shelves. The lack of local produce, added to the pressure upon the amount of food that Venezuelans could access, as imported produce is far more expensive than local produce

Another a cause of Venezuela’s food crisis, is the weaponisation of hunger and the prioritization of a political agenda within a variety of government-based welfare policies, most prominently, 2016’s “CLAP” policy or “The Local Committees for Supply and Production”. According to Venezuela’s current president; Nicolás Maduro, The CLAP policy would decrease the levels of starvation through the nation as the boxes, consisting of food items like milk, rice, sugar, would be distributed to families and individuals across the country. Although, after further investigation by Venezuelan researchers and academic article writers; Due to the fact, Venezuela’s public use their ID’S while placing their votes for an election to verify their identity; President Nicolás Maduro’s congress party (United Socialist Party of Venezuela), were able to access data which would showcase the number of people voted for and more specifically who voted for their socialist party. Within the context of the Clap boxes, they are only distributed to the individuals who voted for Nicolás Maduro party during the election. However, when you consider only 29.5% of Venezuela’s population participated within the 2018 elections and an additional 2.725 million individuals voted in favor of his other competitors, 10,710,940 are not receiving these CLAP boxes to help them through their days, only small bags of rice or fruits are placed by their doors each month. Also, 95% of the goods within these “CLAP” boxes are imported from Venezuela’s neighboring countries; Colombia or Mexico, therefore, increasing the country’s dependence upon exported goods.

Regarding the final cause, the phenomenon of Underproduction in Venezuela has led to a lack of fresh produce to feed its population and to provide or source for its “mercal” or supermarket stores. Although with the little amount of fresh produce grown, many of Venezuela’s farmer’s have restored their profit losses by selling their produce upon the black market as the prices are controlled by producers, the prices are far greater than the disproportionate values within Venezuela’s markets. However, these distributors buy large quantities of produce, originally meant for Venezuela’s public, and smuggle the produce over the borders of both Colombia and even Brazil. This overall reduces the amount of fresh produce within the country and leaves its population dependant upon welfare policies, although Venezuela’s government takes a minor profit from these illegal smuggles, thus simply turning a blind eye upon its population suffering.

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Wrong Policies Caused Food Crisis in Venezuela: Inflation, Urbanization and Food Shortgage. (2023, January 31). Edubirdie. Retrieved March 5, 2024, from https://edubirdie.com/examples/wrong-policies-caused-food-crisis-in-venezuela-inflation-urbanization-and-food-shortgage/
“Wrong Policies Caused Food Crisis in Venezuela: Inflation, Urbanization and Food Shortgage.” Edubirdie, 31 Jan. 2023, edubirdie.com/examples/wrong-policies-caused-food-crisis-in-venezuela-inflation-urbanization-and-food-shortgage/
Wrong Policies Caused Food Crisis in Venezuela: Inflation, Urbanization and Food Shortgage. [online]. Available at: <https://edubirdie.com/examples/wrong-policies-caused-food-crisis-in-venezuela-inflation-urbanization-and-food-shortgage/> [Accessed 5 Mar. 2024].
Wrong Policies Caused Food Crisis in Venezuela: Inflation, Urbanization and Food Shortgage [Internet]. Edubirdie. 2023 Jan 31 [cited 2024 Mar 5]. Available from: https://edubirdie.com/examples/wrong-policies-caused-food-crisis-in-venezuela-inflation-urbanization-and-food-shortgage/
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