Chavez, Venezuela Cope with Milk Shortage

Venezuela is short of milk — so President Hugo Chavez bought a milk plant. But some people say state intervention is what caused the problem in the first place.

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STEVE INSKEEP, host:

Here's another sign of economic trouble in Venezuela. The country is short of milk. That's a big issue for President Hugo Chavez. And to hear the South American leader tell it, it's one more problem created by his political opponents.

His critics say it's Chavez' fault for fiddling with the economy, but that's not stopping Chavez from fiddling some more. His government is going into the milk business. NPR's Juan Forero reports from Barquisimeto, Venezuela.

JUAN FORERO: A machine called an evergreen packs milk at the Los Andes Dairy. The giant plant features ample coolers, where milk is stored. Technicians in white lab coats run pasteurization machines, and workmen load trucks all day long.

(Soundbite of machinery)

FORERO: It's a productive operation, with milk churned out at a rate of 180,000 liters a day.

(Soundbite of machinery)

FORERO: President Hugo Chavez directed the state oil company to buy the plant a few weeks ago, and he put a chemical engineer in charge.

Mr. MAURICIO HERRERA (Manager, Los Andes Dairy, Venezuela): (unintelligible) this number. You can see every month, we have increased all our production in milk.

FORERO: That's the new manager of Los Andes, Mauricio Herrera. He spent a career in the state oil industry, but with the recent milk shortages, duty came calling.

Mr. HERRERA: I received instruction to handle this company, and I assumed that order. If you have management experience keeping oil, you have to use that experience, apply it to the milk business.

FORERO: In Chavez' Venezuela, the state intervenes. It's taken over utilities. It's taken control of oil from big multinationals like Exxon Mobil. It's announced the nationalization of an Argentine-controlled cement maker. So when milk started to dry up, Chavez said the solution was to buy Los Andes. He even went on TV, explaining that the president of the state oil company told him about the milk plant.

President HUGO CHAVEZ (Venezuela): (Through translator) He said I have good news. They're selling a company. I reviewed the characteristics of the company, and I said let's not waste a day. Buy it.

(Soundbite of crowd chatter)

FORERO: In line at an outdoor market, people jostle as vendors sell state-subsidized food. There's meat and cheese and eggs, even milk, but you have to wait in line. And if you go the private markets, you might not find those products at all.

Maria Uscatagee(ph) knows it well, and she's irritated, even though she supports Chavez.

Ms. MARIA USCATAGEE: (Through translator) Milk, eggs, sugar, they're indispensable for the basic diet. We miss them.

FORERO: Experts like Robert Bottome say it's the state's intervention that's causing the problems, and polls show most Venezuelans agree. Bottome edits VenEconomia, a leading business newsletter in Caracas, and he says price controls on milk and other products are too low, a disincentive to producers.

Mr. ROBERT BOTTOME (Editor, VenEconomia): At today's prices, hardly anybody would actually invest in creating a herd to produce milk.

FORERO: At the same time, population is rising.

Mr. BOTTOME: Demand for milk has gone up. So you've got a double whammy: less production and more people wanting milk.

FORERO: Consequently, more than half of the milk in Venezuela is imported, but back at Los Andes…

Unidentified Man: (Spanish spoken)

FORERO: A plant manager proudly shows off where milk is processed and packed. The plant has ramped up production eight-fold since March, but it only accounts for about five percent of national production, making it little more than a drop in the national milk bucket. Juan Forero, NPR News, Barquisimeto, Venezuela.

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