Venezuelan President Hugo Chávez recently threatened nationalization of warehouses owned by the company Polar in Barquisimeto, a town located in west-central Venezuela. Polar is one Venezuela’s best known companies, perhaps most famous for its beer products, as well as maize flour– from which the arepa, a staple food in Venezuela, is made. Tension between the government and Polar heightened in April 2010, as the government closed a Polar warehouse in Barquisimeto. After closing the warehouse, the government proceeded to seize and distribute the food products throughout the country. Chávez accused Polar of hoarding its products, leading to artificial shortages and price inflation. Polar officials claimed that the power rationing implemented by the government forced a decline in production.
Since April, Chávez has amplified his anti-Polar rhetoric, even announcing the possibility of nationalizing the entire company. With the oil, electricity, and telecommunications industries nationalized, it seemed likely that Polar – or at least the Barquisimeto installations – would be nationalized as well. However, Chávez has faced strong opposition to his Polar comments throughout Venezuela. In a recent poll by Consultores 21, an opinion poll based in Caracas, 84 percent of Barquisimeto residents opposed the takeover. Polar workers have been particularly fierce in their opposition, as many fear that nationalization will lead to employment and benefit cuts. Polar employees are also concerned that they will not be able to unionize under state control, making it nearly impossible to reclaim benefits that may be lost under state ownership.
While Chávez critiqued Polar for hoarding foodstuffs, his own administration has come under attack for its own handling of food supplies. Last month, PDVAL – a state program that uses profits from oil revenue to distribute food throughout the country, at prices regulated by the government– was found to have allowed tens of thousands of food products to spoil. While the government initially estimated that about 30,000 tons of food went bad, some opponents put that number as high as 120,000 tons, equivalent to feeding 17 million (out of 26 million) Venezuelans in the month of June.
The poor publicity surrounding Polar and the administration’s handling of food supplies comes at a time of economic stagnation in Venezuela. Inflation currently stands at 30 percent, while Venezuelans face food shortages of many staples, including meat, dairy, and flour. Venezuela’s economy remains stagnant while the rest of Latin America quickly rebounds from the global recession. While the economy in Venezuela grew an impressive 7 percent in 2007, it contracted nearly 6 percent in the first quarter of 2010. This is in sharp contrast to Brazil’s economy, which grew by 9 percent in the first quarter of 2010; Mexico’s, which grew by 4 percent; and Peru’s, which grew by 9 percent. Private business owners in Venezuela have complained that increased government regulation has made the economy inefficient, while Chávez puts fault on the private sector, claiming that more government involvement is needed to revitalize the economy.Uncertainty continues over whether Chávez will follow through with his threats of nationalizing Polar. The strong rebuke the president received following his threats appears to have forced Chávez to temper his rhetoric. Faced with sagging popularity in the face of legislative elections in the fall, it is doubtful that the Chávez government would risk any more backlash by nationalizing one of Venezuela’s most popular beverages.