According to figures from the Central Bank of Venezuela (BCV), commercial activity had a 34.9% recovery in the first semester of the year, compared to the 23.6% contraction registered between January and June of 2003.

Economic indexes begin to show signs of recovery after the entrepreneurial strike and the drop in oil production, which forced the government to take emergency measures like currency exchange control and price regulation. Sales of mass consumption products, clothing, shoes, household appliances, and food services registered a substantial rise.

A report for the National Association of Supermarkets (ANSA), by the Datos polling firm, reveals that consumption of basic necessities grew by 14.7% in the first semester of the year.
Products with the highest sales were oatmeal (49%), corn flour (32%), and perishable refrigerated milk (24%). On the other hand, powder milk suffered a 15% drop caused by importation problems. According to entrepreneurs in this sector, the government-fixed price of 6,555 bolívares per kilogram of this product, is below the commercialization costs.

Sales of the rest of the products of the “basic basket” have recuperated. The demand for personal care products has risen 26%. The only product belonging to this group whose sales contracted was wet napkins (-1%), while shampoo, sanitary napkins, soap, toothpaste, razors, skin lotions, rinses, and other products have kept their sales volume.

According to the same poll, housekeeping products grew 20%. The only products that suffered a contraction were floor wax (-8%) and insecticide (-20%).

In general, consumption of packed goods (non perishable foods, personal care and housekeeping products) in the first six months of the year, increased 31%, compared to the first semester of 2003.

Induced purchases

Javier Macedo, president of (ANSA), reported that in the first two weeks of August, supermarkets registered an important sales flow, partly triggered by political uncertainty. However, he explained, the inventories were not affected; they were able to satisfy the pre-referendum and post-referendum purchase demands, except for those products with the normal pricing problems, such as powder milk, coffee, pork, and beef.

Specifically in June, the ANSA-Datos report reveals that demand for personal care and housekeeping products rose more than 2% compared to that of May 2004.

That month, the products belonging to the basic necessities “basket”, including corn flour, wheat flour, pastas, rice, sugar, sardines, dropped 2.4%.

Consumption of several non perishable products; dairy products, mayonnaise, ketchup, gelatin, coffee, vinegar, and all those mentioned before, had 0.5% growth in June this year, compared to consumption in May.

Likewise, housekeeping product consumption reflected 2.6% growth, while the increase for personal care products was 2.2%. On the contrary, liquor consumption dropped 2.3%. Non alcoholic beverage consumption dropped 0.9%.

Producers demand a raise
Farmers requested that the government fix the new prices for the upcoming harvests of corn, sorghum and rice. Fedeagro, the main organization of agricultural producers, claims that if this measure is not taken, industries will pay harvests at the price of last year, which would make it difficult for farmers to comply with their loan payments to public and private banks.

The organization proposed that the enterprises guarantee their reception of cereals, and that once the raise is approved, the remaining amount be paid to producers, retroactively.
Currently, the price of paddy rice is fixed at 480 Bs., for which they propose 560 Bs. as a fair price (a 16.66% increase). Corn production is valued at 450 Bs., while the farmers propose 570Bs.(26.6% increase),

Nevertheless, industries refuse to accept this deal and ask that the government adjust consumer prices in order to guarantee payments to the producers.

Published in Quantum, No 29.