At Least I've Got Chicken

We've heard a lot in the last year or so about food shortages in Venezuela. The U.S. press has a nice little narrative that fits together well. Price controls and land nationalizations in Venezuela have cut food production of basic staples- rice, corn, eggs, milk, poultry and so forth. Because clearly, price controls and other interference with the market removes incentives to produce, and just as clearly, seizing land from rich and productive farmers and giving it to the lazy and feckless poor is another deterrent to production. Just like in Stalinist Russia, socialist land reform is always a disaster for agriculture.

Well, this narrative is neat and tidy, but it also happens to be wrong, of course. It fails to explain countries with highly productive, socialized agricultural sectors like Hungary- and it fails to explain Venezuela today. It's true that last year Venezuela experienced shortages of some staple foods in the narrow technical sense, but it's equally true that Venezuelans are both producing and consuming more staple food products than they were at the beginning of the Chavez years, and that food production and consumption is steadily increasing. Though you won't hear that from the New York Times or the rest of the mainstream press.

Let's take poultry for an example, since chicken is a common and highly prized meat in Venezuela. You would think, wouldn't you, from hearing the New York Times reports that 'store shelves in Caracas are empty of chicken' that chicken production in Venezuela has collapsed. In fact, however, poultry production is up by about 33% since the start of the Chavez years (1999) and is about triple what it was in 1990, and 20% higher than in 2005 (when the revolution took a sharp left turn)- today it's about 860 000 metric tons, up 5% from last year. The real story is of a steady increase, not a decrease. And this is of course just one example. Corn production is up 50% from 1999; rice production is up almost 90% since 2001; coconut production is up almost 60% since 2001. The land reform has actually been good for production of many staples. This shouldn't really be a surprise. The Chavez regime has been distributing land to smallholders and cooperatives, who tend to be pretty efficient producers in the Latin American context, as opposed to the owners of latifundias who are notoriously unproductive and lazy. Latifundias have traditionally existed in large part to control the peasantry as much as to produce goods, and even many capitalist regimes in the region have recognized that they are a drag on development.

The reason there appear to be 'shortages' is that consumption has in fact increased faster than production. Chicken consumption is up 45% over the last six years, and egg consumption up 40%. Now it's to be expected that the agricultural sector will respond to the increased demand, but as yet it hasn't closed the gap. Production is increasing, but not as fast as consumption (people are consuming more because the poor and working classes have higher incomes today, and because the new system of subsidized government supermarkets have succeeded in greatly improving food and nutritional status among the poor). So in the short run, there have been some shortages. That's to be expected, as a temporary situation. Already the government has announced increases in the regulated prices of many foods, to encourage production to rise even faster this year.

It's true that price controls have dissuaded some farmers- the more avaricious ones, and the ones who don't have enough of a social conscience to respond to moral incentives- from increasing production. Nevertheless, it's not that simple. The controlled prices, first of all, are not low enough to make it uneconomical for farmers to produce; the proof is that they are producing more this year than last year. The Chavez regime has successfully managed to limit the shortages by, among other things, using the stick as well as the carrot. They have threatened nationalization of those businesses which hoard food or use usurious or speculatory methods. One of the new decree-laws passed in the last couple of weeks, allows for greater government intervention in the marketing of food, and for the nationalization of marketing businesses which fail to serve the common good. This is as it should be- the production of food can and should remain an endeavor carried out by farmers' cooperatives, but the distribution of necessities like food and medicine is too important for society to be left in the hands of unscrupulous private individuals. Furthermore, people like the editorial staff of the NYT forget, as they so often do, that people respond to non-monetary pressures too- especially farmers, and especially in a socialist country like Venezuela. People will not stop farming just because of price controls. They might continue for any number of reasons. Perhaps because they love farming, or because they want to honor an ancient family tradition, or because this is the job they know best how to do, or because they want to serve their country and humanity by providing food for those who need it. The power of economic and monetary incentives should not be underestimated, but neither should the power of moral incentives. While the systemic problems of so many socialist economies show that we can't do away with economic incentives, the successes of a country like Cuba show that moral incentives are powerful too. A healthy society is one that combines both, and finds the optimal tradeoff between economic wealth and moral health. There is every sign that socialist Venezuela, under the leadership of the Bolivarian revolutionary government of Chavez, will find that tradeoff and combine both economic and moral incentives to build a society that provides the necessities of life for each individual but more importantly, encourages the transformation of every person into a model of socialist virtue.