Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Tuesday, May 14, 2013

May 14, 2013

Economics & Finance

POLAR tells government to boost output
Venezuela's top food producer, Empresas POLAR, challenged the country's socialist government to boost output of basic staples and ease nagging product shortages, rejecting accusations it is hoarding products to destabilize the economy. President Nicolás Maduro said over the weekend that POLAR, which makes products from beer to detergent, was intentionally cutting output to leave supermarket shelves bare and weaken his government through "economic war." POLAR President Lorenzo Mendoza, in an energetic press conference, said the product shortages have been partly spurred by inefficiency of state-run companies nationalized during the 14-year-rule of late socialist leader Hugo Chavez. "There's an immediate solution to this: Get the public sector (food production) plants running at 100%," Mendoza said, insisting POLAR's output of products such as rice and corn flour were at maximum capacity. He added the government should increase the regulated prices of food products that have in some cases forced companies to produce at a loss. Mendoza said. “The accusations that we are producing less than last year are false,” Mendoza told reporters. “I presume that President Nicolas Maduro is not well informed about the situation and about what’s happening.” Mendoza said his company has increased production of cornmeal by 10% in the past four months, and he offered to buy or rent government-owned corn processing plants to boost output event further. Maduro said he wanted to work with POLAR to resolve the situation, while warning it to leave governing the country to him. He told Vice President Jorge Arreaza to arrange a meeting, which Polar said that it would attend as it is willing “to cooperate with the search for solutions that favor the Venezuelan people”. After a two hour meeting Arreaza said they had agreed that "economic agents should stay out of all partisan politics and dedicate themselves to production". He said they also discussed cyclical excess demand and the need to increase production. Maduro is scheduled to meet with Mendoza today. (Reuters, 05-13-2013;;; El Universal, 05-13-2013;; Bloomberg,; Latin American Herald Tribune,;; and more in Spanish: AVN;

Maduro claims economic warfare has begun
President Nicolás Maduro says economic warfare is now under way, seeking to disrupt supplies, launch unbridled inflation and undermine Venezuela's international credit. More in Spanish: (El Nacional, 05-14-2013;; El Universal,

Opposition says the Government is solely responsible for shortages, and criticized the fact that Venezuelans depend on imports for their food. Ramón Guillermo Aveledo, Secretary General of the United Democratic Conference (MUD) says that for more than 14 years the Government has "attacked productiveness through land invasions, the confiscation of productive enterprises, and by expropriated farms and industries, creating a lack of both personal and lefal security of those who work in the countryside and cities". More in Spanish: (El Nacional, 05-14-2013;

Experts doubt Central Bank's capacity to settle private-sector debt
The business sector applauds the Venezuelan government's decision to speed up currency allocation. However, skepticism surrounds the government's actual payment capacity. "The bad news for us is that operating reserves are quite low," says Jorge Roig, first vice president of the Venezuelan Federation of Industry and Trade Chambers, FEDECÁMARAS, following statements by Nelson Merentes, minister of Finance, and Edmée Betancourt, president of the Central Bank of Venezuela. Based on information provided by the national government, 85% of currency pending allocation to companies amounts to USD 2.6 billion, a figure much lower than estimates by FEDECÁMARAS. (El Universal, 05-11-2013;

Agribusiness, pharmaceuticals, airlines and chemical industries owe U$D 4.1 billion to suppliers abroad
Companies operating in agribusiness, pharmaceuticals, chemicals and airlines owe their suppliers over U$D 4.1 billion since the Foreign Exchange Administration (CADIVI) is operating with average delays of 200 days, and this is lowering inventories. Pablo Baraybar, President of the Food Industries Association says suppliers abroad are refusing to dispatch to Venezuela because they have not been paid. More in Spanish: (El Nacional, 05-14-2013;

Wholesale imported product prices have risen quickly during the first four months of 2013, for a total increase of 16.8%, double what they were in 2012 and the highest recorded rise since 2005. More in Spanish: (El Universal, 05-14-2013;


PDVSA has received U$D 40 million from gov't agencies in two years
Financial data supplied by state-run oil holding Petróleos de Venezuela (PDVSA) points to a funding network with public banks and government agencies. Through promissory notes, investment certificates and borrowing, the state oil company managed to get U$D 40 billion in 2011-2012 from the National Treasury, Banco de Venezuela and Banco del Tesoro. Company information indicates part of the debt has been repaid. In order to cover remaining liabilities, the state oil company has taken steps, such as the renewal of the certificates delivered to state-owned banks in January 2013. (El Universal, 05-11-2013;

International Trade

4 bilateral agreements have been signed with China
President Nicolás Maduro and China's Vice President Ly Yuanchao have signed 4 bilateral agreements that include building a port for PEQUIVEN in Carabobo State, along with new food processing techniques. More in Spanish: (AVN, 05-14-2013; and

760,000 tons of food imported to strengthen reserves
A total of 760,000 tons of food will arrive in Venezuela this week to increase the national reserve, thanks to agreements made with Uruguay, Argentina and Brazil, says Food Minister Felix Osorio. Osorio says the goal is to strengthen the three-month food reserve of about 2 million 300 thousand tons of food. Among staples scheduled to arrive within the coming days are edible oil, whole milk powder, beef, canned tuna and sardines, raw sugar, soy and sorghum flour, with an investment of 600 million dollars. (AVN, 05-13-2013;

Agreements with MERCOSUR nations total U$D 11 billion
President Nicolas Maduro say trade agreements between Venezuela and Brazil, Argentina and Uruguay in MERCOSUR are up to a total U$D 11 billion. Brazil takes the greater share, U$D 6 billion, followed by U$D 3 billion with Argentina and the remainder with Uruguay. Brazil is studying emergency food sales to Venezuela, according to Marco Aurelio Garcia, foreign policy adviser to President Dilma Rousseff. Maduro this week visited Uruguay, Argentina and Brazil. (El Universal, 05-13-2013; and more in Spanish: AVN;

Colombia seeks to renew agribusiness trade with Venezuela
Colombia's Agriculture Minister Juan Camilo Restrepo has asked Venezuelan authorities to meet commitments made in 2011 to renew agribusiness trade between both nations. He said agreements made two years ago have been poorly executed. More in Spanish: (El Universal, 05-14-2013;


Maduro again charges the US plans his overthrow
President Nicolás Maduro warned Venezuela's Armed Forces that "the empire", as he calls the United States, "does not rest" in its efforts to "take over" Latin America and specially Venezuela, and that it "knocks on doors to see who opens". Maduro made his charge during military ceremonies at Fort Tiuna in Caracas, the main military garrison in the country. He added the US has not gone any further "because they have not been able to". "Let no one be deceived by a smile or a greeting, or praise or a visa to visit the United States", he said as he announced an increase in military pay. He had previously said US President Barack Obama is making "a serious mistake" in not recognizing his election last April 14th. He said Obama had been tricked by Venezuela's opposition who "promised him I would be overthrown in 24 or 48 hours, and that there would be a violent crisis here". More in Spanish: (Infolatam)

Government launches massive street security operation
President Nicolas Maduro has launched a massive security plan aimed at curbing street crime. Under operation "Safe Homeland", 3,000 soldiers will patrol the streets of the capital Caracas and other cities. He says the plan would bring peace to Venezuela, which has one of the highest homicide rates in South America. The opposition has long criticized the government's record on crime, and used it as a campaign issue in recent polls. The government claims more than 16,000 people were killed in crimes in 2012, a rate of 54 per 100,000. However the Venezuela Violence Observatory, put last year's murder rate much higher - at 73 per 100,000 people. Last year, the government introduced a new gun law banning the sale of firearms and ammunition.(BBC;

Venezuela has received 76% of Russia's weapons sales to Latin America
Russia exported U$D 14.5 billion in weapons to Latin America over the past 12 years, and Venezuela took 76% of the total, according to Anatoli Isaikin, director of the ROSOBORONEXPORT weapons trading firm. He said trade with Venezuela is part of a strategic alliance between both governments in which Russia is the main weapons purveyor to Venezuela, and is also building two plants here to assemble Kalashnikov automatic rifles and munitions. The list of Venezuelan purchases includes 100,000 Kalashnikov rifles, 47 helicopters, 25 SUMK2 fighter aircraft, T-72B1 combat vehicles, SMERCH and GRAD missile launchers, S-300 antiaircraft defense equipment, and transport trucks. More in Spanish: (El Nacional, 05-14-2013;

Santos says he works with Maduro despite differences
Colombian President Juan Manuel Santos says "We have deep differences with Chávez and Maduro, but this is not an obstacle in finding matters of common interest where we can work together to benefit our people". Santos made the statement after meeting in Rome with Pope Francis I. He made the reference as an example in discussing his peace talks with Colombian guerrillas. More in Spanish: (El Universal, 05-14-2013;

MERCOSUR will discuss democracy in Venezuela
The MERCORSUR Human Rights Committee has agreed to review the state of democracy in Venezuela, based on violent episodes following the April 14th presidential election and the arrest of General Antonio Rivero. Leopoldo López, of the opposition Voluntad Popular organization presented the committee with proof, videos and photos of political persecution and torture. More in Spanish: (El Universal, 05-14-2013;

Cubans in Venezuela
Retired Major General Antonio Rivero, recently detained on charges of fueling riots after the presidential election of April 14, collected data on the extent of Cuba-Venezuela agreements and disclosed alleged meddling of Cuban advisors in security and defense matters. According to his calculations about 210,000 Cubans have arrived in Venezuela through 2012, as part of an alliance established by Hugo Chávez. A number of agreements have enabled Cubans to take part in a wide range of government plans and social welfare, from health to national intelligence to security. (El Universal, 05-11-2013;

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group. 

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