The Devil's Excrement

I have mentioned Carlos Machado Allison in this blog before. He is retired from Universidad Central de Venezuela, was President of the Venezuelan National Fund for Agrarian Research and is currently a Professor at Venezuela’s premier Management School IESA, where he specializes in studying agriculture. He is just finishing a book called “Agriculture in Venezuela”. Today he is interviewed in page 3 of El Nacional and I wish I had time to translate the whole thing, here are some excerpts:

“The agricultural states are the poorest of the country”

On the state being the biggest landowner:

“This is true; it has so much that it does not even know what it has. Some say it has 8 million hectares, other say 20 million. But there is no census…”

Is controlling the land, controlling production?

“Exactly the opposite. What the Government has to do is to promote the pure and simple sale of the enormous extensions it has, get rid of the bureaucratic load that it implies being the owner of land, mostly unproductive and end the legal fight of who owns them”

Do you think the state can reactivate the agricultural sector when it distributes the intervened land?

“In this country, rural people have always been discriminated against and I think it is impossible to develop in a place where people are not the owners of what they have. If I am not the owner of a farm, I am not going to invest in it. If the land continues belonging to the Government and they offer to end them to me I am not going to produce beyond the “conuco” (Parcel of land owned by small farmers). The policy should be one of regularizing not intervening the land.”

The Governors say these measures are to fight against the large farm state and guarantee a basic supply of foodstuffs.

The first thing that has to be made clear is that the number of latifundios (large farm states, defined as more than 5,000 hectares) in Venezuela is small. These farms are located in the plains or in Apure; they have hard soils, lateritic ones, with lots of iron and alumina.

The lands being intervened are not fertile?

“Yes, they are not very fertile and flood easily…”

Why do you think the Government will fail producing sugar?

“The old sugar plants were privatized when they were essentially closed, almost scrap metal, after the Government realized that producing sugar is a bad business. The private sugar concerns survive importing sugar, which in the international markets has a low price and they make money packaging and distributing the product and using part of the molasses in making rum.”

The Minister of the Environment assures us that this agrarian reform will be successful because the conuco will be reborn

“That is an old and wrong philosophy which perhaps she discovered in North Korea or China. But when 90% of the population is urban in a country, the conuco can not function as an economic unit because a truck that sells in the city …has to visit 50 conucos to pick up ten kilos of tomatoes. With this urban concentration food production ahs to be a volume business.”

What will happen if the state distributes the land as conucos?

“I know a group of people that produces cocoa in five hectares in Barlovento (East of Caracas) They make about one hundred thousand bolivars ($50) with that production. The guy sells sunglasses in the streetlight of Caucagua and the cocoa ends up being the Christmas gift for the family. They would need to integrate a very high number of hectares to justify the introduction of machinery and technology. …If you leave those farmers in Cojedes, in the open plains, with those difficult soils, without water, no technology or capability, working five hectares of sugar cane, he is going to starve to death.”

The Government assures us that promoting self sustainability guarantees our feeding

“There are no self sustaining countries in food in the world. Some almost make it, they are the poorest countries on the planet, like Ethiopia, where nothing is exported or imported, but people don’t eat either.”

The future could be sweet

“We have the best cocoa in the world, we can create added value and produce chocolates for export, or rum, suggest Machado Allison.”

There you have it, this is what an expert who knows the realities of agricultural production thinks and he does nothing but study this problem. The rest is misguided idealism and yearning for a past long gone.

The Government of Cojedes state took over as proimised the British owned cattle ranch Hato El Charcote. The Goveror stil claims they are respecing private property, but “it is not absolute” whatever that means. You can read more about it here, here and here. The people at the bottom are not part of the intervention, they are the invaders of the ranch, who are protesting because the Government apparently is not going to give them the intervened land, but it will be handed over to 28 cooperatives of farmers.

Why is it that the Governor of Barinas state, Chavez’ father, has not called for the intervention of large farm states in Barinas?

The answer in the comments, but think about it or read Daniel’s article, the last sentence should explain it.

Yesterday, the Venezuelan National Assembly approved the changes to the new penal code. These changes criminalize dissent, criticism and any activity against Government officials by individuals. In the case of criticism of President Chavez, it is a criminal offense to “offend” the President either publicly or in private.

What it means, once it gets published in the next few days and becomes law, is that the Government may go after anyone that tries to express any form of criticism against the Government or Government officials. This is in effect, a limitation of freedom of speech which will be diminished significantly going forward.

One possible way to counter this, is to write blogs like this one. One, two or three voices may be silenced but not dozens. If any of you out there is inclined to express and write opinions, whatever they may be, start a blog, tell the world how you see it. It is cheap and it is simple. The Internet could be a very powerful and important medium for all of us in the years to come, it can not be stopped or controlled.

I use a software from Userland called Radio Userland which including the hosting for one year of my blog, has a very low cost of US$39.95. You can even try it for free for one month to see if you like it. The rest is however much time you want, or have, to put into it.

There is also software that is free, such as Google’s Blogger, which is Web-based and you can be blogging in minutes when you set it up. There is typepad and many others. If anyone needs some help, write to me via private e-mail. I can help, particular with Userland, which I know fairly well.

 Don’t let them squash our freedoms!

Yesterday, the Venezuelan National Assembly approved the changes to the new penal code. These changes criminalize dissent, criticism and any activity against Government officials by individuals. In the case of criticism of President Chavez, it is a criminal offense to “offend” the President either publicly or in private.

What it means, once it gets published in the next few days and becomes law, is that the Government may go after anyone that tries to express any form of criticism against the Government or Government officials. This is in effect, a limitation of freedom of speech which will be diminished significantly going forward.

One possible way to counter this, is to write blogs like this one. One, two or three voices may be silenced but not dozens. If any of you out there is inclined to express and write opinions, whatever they may be, start a blog, tell the world how you see it. It is cheap and it is simple. The Internet could be a very powerful and important medium for all of us in the years to come, it can not be stopped or controlled.

I use a software from Userland called Radio Userland which including the hosting for one year of my blog, has a very low cost of US$39.95. You can even try it for free for one month to see if you like it. The rest is however much time you want, or have, to put into it.

There is also software that is free, such as Google’s Blogger, which is Web-based and you can be blogging in minutes when you set it up. There is typepad and many others. If anyone needs some help, write to me via private e-mail. I can help, particular with Userland, which I know fairly well.

 Don’t let them squash our freedoms!

Maruja Tarre, who probably does not remember that we met too many years ago in Boston and who I understand is a stealth reader of this blog, wrote this very funny article in today’s El Universal which I thought had to be translated. Life may get tough, but one needs to keep a positive attitude at all times, humor, especially intelligent humor helps in this goal.

Good Ideas for 2005 by Maruja Tarre

I have been told that, as resolution for the New Year, many people have decided to “collaborate” in enthusiastic fashion with the revolution. Behind are left the marches, whistles, and shouts, they have now decided to take advantage of the oil bubble and benefit of the very elusive bonanza. There even seems to exist a combo, promoted by highly entrepreneurial facilitators, that by the lowly sum of a million and a half bolivars, eliminates names form the recall petitions and gets Bolivarian passports.

Impressed by the sensibility and wisdom of these new and convinced Bolivarian, I have been thinking ways to deepen the revolution and contribute, me too! with the success of the process.

I remained absolutely convinced by the Minister that is in charge of large farm states and I allow myself to suggest that in Cojedes state he does not forget Hato Piñero. As Otaiza expressed it very clearly, there are yuppie values that do not agree with revolutionary ideology. The use of land is fundamental and in Piñero, they have allowed the proliferation of a large amount of animal species which are absolutely useless and savage. In particular, there is a birdie called chechena that attracts supposed scientists from all over the world. We all know that most of them are CIA or Mossad agents, thus, the best thing that can be done with the chechenias is to use them to feed the people.

One can take advantage of the successful reinstruction of Parque Central to decide, once and for all, the destiny of the Contemporary Art Museum Sofia Imber. There were too many strange paintings there, which do not correspond to revolutionary esthetics. We should begin a new collection, with national values appreciated by the Chavista people. I ask myself: where is that famous painting that Commander Chavez painted when he was jailed in yare? Jose Vicente (the VP) showed it in the famous video he taped in clandestine fashion in jail and we were all in awe in front of that masterful trace and the beauty of colors of that small masterpiece. If the VP incorporated it to his collection he should donate it to the nation to initiate with shine the new era of the Contemporary Art Museum Sofia Imber. (We still have pending the change in name!)

As for oil, let’s follow Russia! It has been demonstrated at the international level, the transparency and lack of corruption in that old nation which turn it into the ideal partner for any important business. Putin and company will bring us the security that the oil money will be well managed and invested. These are only three modest ideas, but I will continue thinking other recommendations with real revolutionary value that will allow me to join daring 2005 the group of winners. Happy New Year!

The Governor of the State of Cojedes announced yesterday that on Saturday they will begin the “intervention” of the Hato El Charcote farm, owned by British company Vestey, under the decree issued by that Governor in mid-December.  The concept of “intervention” does not exist in Venezuelan jurisprudence, so that it is unclear exactly what it means. According to the Governor: “The intervention will be performed with all of the machinery of the State to establish the first beachhead of the “Free land and Men Mission…With the aid of all of the Armed Forces and police forces and the authorities of the Governor ….”. According to that State’s Attorney General, the term intervention “means to make use of all the power of the State o solve a problem” and “the farm will be intervened without affecting its operations”

Since the whole issue is by now obscured in the details, it is a good time to step back a little and ask what is the fuss all about?

First of all, while many want to make this an economic or social issue, it is really simply a very emotional and political issue, not an economic one. Land issues were important in Venezuela 50 years ago, when over half of the country’s population was rural. Since then, Venezuela has seen the same migration to the urban centers seen in the rest of Latin America, perhaps even more intense, thanks to the oil revenue which has allowed the country to import a large fraction of its agricultural needs.

By now, almost 90% (89% is urban according to 2003 statistics ), so that on the scale of the social and economic problems of the country, this is not a huge issue. But it is an emotional one. Three quarters of all Venezuelans have some direct connection to a recent rural past, of failed efforts or lack of land or the absence of sufficient funds to make the land or family projects self-sufficient.

The story is one known all over the planet, but intensified in Venezuela: Large agricultural projects using modern techniques produce at such low costs, that small and medium size farms do not have the productivity and competitive factors required. The result is that in most of Venezuela, agricultural products are produced at prices which are higher than those of the equivalent import. The main exception to this is cattle. Meat can be produced at competitive prices and profitability, but the Government prefers agricultural products over cattle raising and calls many large cattle ranches a waste of land.

Proving the poor productivity and competitiveness of our lands, is the fact that the Chavez administration has created a chain of “popular” markets run by the Government and the military, which by now have become the first food distribution entity in the country. Over 80% of the products sold at this company, called Mercal, are imported and in no way has this company been involved in promoting local production or giving preferential treatment to local producers.

The land issue has four separate components all of which were considered in the original Land Bill of 2001, which in some sense propelled the opposition movement against Hugo Chavez, which saw that bill as a threat to the right of private property provided by the 2000 Chavez Constitution. There were four different components to that bill: Attacking the large farm states (Latifundios, defined by law as farms above 10,000 Hectares or 25,000 acres), promoting the use of unused lands, putting order in land ownership and introducing an element of Government planning into the type of crops that could or could not be grown.

According to the Land Bill, a new institution was created The National land Institute (INTI) which would be in charge of issuing new regulation required by the scope of the law, inventory the land and begin certifying which lands had rightful ownership and were being devoted to the right type of crops. Separately, the Land Institute would be in charge of  administering those lands under Government ownership.

Unfortunately, like much in the Chavez era, progress has been extremely slow, despite the fact that Chavez’ own brother was named as the first President of that Institute. The law stated that any expropriation could not begin until the full inventory of land was completed. That inventory is yet to be finished.

In November, after the sweeping victory of his party in the gubernatorial elections, Chavez held a closed door meeting with his party’s Mayors and Governors in which he said that the problem of large farm states should be the responsibility of the Governors. This is contrary to the Land Bill.  On December 19^th., right before Christmas, the Governor of Cojedes decreed the intervention of 16 farms, including British owned Hato El Charcote. This was followed the next day by nine Governors pledging to issue similar decrees, clearly following Chavez’s orders. So far, two other Governors have followed suit.

At the beginning some saw this as simply another legal misstep by an overeager regional Governor in his efforts to please Chavez. I disagreed. Too many times I have seen this Government start something only to gauge reaction and see whether to move forward or not. Coming after the Fuerte Tiuna meeting, this seemed to be no innocent move by a regional Governor. Unfortunately events have proven me right. Where I did make a mistake was in thinking that the British farm had been included for “balance” and that it would be Venezuelan owned farms that would be the target of the first interventions. Nothing has been further from the truth, which may be interpreted as the beginning of a new stage in this “revolution” with the Government ready for the first time to ignore international opinion.

The issue is simply political and emotional; who can disagree with the Government promoting production in unused lands, the minimization of large land states and determining the rightful ownership of land in Venezuela? But the truth is the Government is the biggest lawbreaker in Venezuela. According to a recent study by the Venezuelan Ministry of Agriculture, there are only 2.1 million productive hectares of land in Venezuela. But the Venezuelan Land Institute (INTI) owns 8.6 million hectares of arable land in 1,492 properties across the country. Thus, if the Government distributed this land among the estimated 660,000 rural families, it would give each one 13 hectares of land or 32.5 acres to each rural family. If this were an economic issue it would start right there. In fact, the cost of producing one season of crops is probably larger than the cost of the land for most crops.

To make maters even worse, of these 1,492 states, 53 of them have a total of 5.9 million hectares giving them an average of over ten times the definition of what a large farm state or latifundio is. Thus, if the Government really wanted to be revolutionary, it could give away only 30% of its own land and that would represent land equivalent to all of the productive land in Venezuela today!

But the whole process is simply a mockery, as legalities are simply set aside or in the words of the Governor of Cojedes “social needs are above legal technicalities”. Not only do Governors not have the legal power to do what they are doing according to the Land Bill, but other aspects of the law are also being violated. First of all, not all of the farms “intervened” in Cojedes are above 10,000 hectares in size. Second, ownership is sometimes being questioned, but only partially, but the whole farm will be intervened; some of the intervened lands have ownership and crop certification by the land institute and “unused” land is being defined as land invaded by squatters over three years ago without the Government making any effort to remove them.

Agroflora, the British company that owns Hato El Charcote actually published a full page ad in today’s newspapers saying that: 1) The old Agrarian Institute recognized in 1972 and 1978 the private nature of this farm. 2) The new Land Institute (INTI) recognized in 2003 the “clear and uninterrupted” chain of ownership of Hato El Charcote. 3) The land known as “El Charcote” owned by Dictator Juan Vicente Gomez was recovered by the Venezuelan Government in 1936 and is not related to Hato El Charcote. 4) The chain of ownership of Hato El Charcote has been uninterrupted since 1830. 5) They aim to prove the land is in use or invaded with the process.

This is probably all true, but in the end it does not matter to a Government that cares little about legality or economics. This is simply about gaining popularity via the use of highly charged emotional and complex issues, which are hard to explain or understand. This is what populism is all about.

The Governor of the State of Cojedes announced yesterday that on Saturday they will begin the “intervention” of the Hato El Charcote farm, owned by British company Vestey, under the decree issued by that Governor in mid-December.  The concept of “intervention” does not exist in Venezuelan jurisprudence, so that it is unclear exactly what it means. According to the Governor: “The intervention will be performed with all of the machinery of the State to establish the first beachhead of the “Free land and Men Mission…With the aid of all of the Armed Forces and police forces and the authorities of the Governor ….”. According to that State’s Attorney General, the term intervention “means to make use of all the power of the State o solve a problem” and “the farm will be intervened without affecting its operations”

Since the whole issue is by now obscured in the details, it is a good time to step back a little and ask what is the fuss all about?

First of all, while many want to make this an economic or social issue, it is really simply a very emotional and political issue, not an economic one. Land issues were important in Venezuela 50 years ago, when over half of the country’s population was rural. Since then, Venezuela has seen the same migration to the urban centers seen in the rest of Latin America, perhaps even more intense, thanks to the oil revenue which has allowed the country to import a large fraction of its agricultural needs.

By now, almost 90% (89% is urban according to 2003 statistics ), so that on the scale of the social and economic problems of the country, this is not a huge issue. But it is an emotional one. Three quarters of all Venezuelans have some direct connection to a recent rural past, of failed efforts or lack of land or the absence of sufficient funds to make the land or family projects self-sufficient.

The story is one known all over the planet, but intensified in Venezuela: Large agricultural projects using modern techniques produce at such low costs, that small and medium size farms do not have the productivity and competitive factors required. The result is that in most of Venezuela, agricultural products are produced at prices which are higher than those of the equivalent import. The main exception to this is cattle. Meat can be produced at competitive prices and profitability, but the Government prefers agricultural products over cattle raising and calls many large cattle ranches a waste of land.

Proving the poor productivity and competitiveness of our lands, is the fact that the Chavez administration has created a chain of “popular” markets run by the Government and the military, which by now have become the first food distribution entity in the country. Over 80% of the products sold at this company, called Mercal, are imported and in no way has this company been involved in promoting local production or giving preferential treatment to local producers.

The land issue has four separate components all of which were considered in the original Land Bill of 2001, which in some sense propelled the opposition movement against Hugo Chavez, which saw that bill as a threat to the right of private property provided by the 2000 Chavez Constitution. There were four different components to that bill: Attacking the large farm states (Latifundios, defined by law as farms above 10,000 Hectares or 25,000 acres), promoting the use of unused lands, putting order in land ownership and introducing an element of Government planning into the type of crops that could or could not be grown.

According to the Land Bill, a new institution was created The National land Institute (INTI) which would be in charge of issuing new regulation required by the scope of the law, inventory the land and begin certifying which lands had rightful ownership and were being devoted to the right type of crops. Separately, the Land Institute would be in charge of  administering those lands under Government ownership.

Unfortunately, like much in the Chavez era, progress has been extremely slow, despite the fact that Chavez’ own brother was named as the first President of that Institute. The law stated that any expropriation could not begin until the full inventory of land was completed. That inventory is yet to be finished.

In November, after the sweeping victory of his party in the gubernatorial elections, Chavez held a closed door meeting with his party’s Mayors and Governors in which he said that the problem of large farm states should be the responsibility of the Governors. This is contrary to the Land Bill.  On December 19^th., right before Christmas, the Governor of Cojedes decreed the intervention of 16 farms, including British owned Hato El Charcote. This was followed the next day by nine Governors pledging to issue similar decrees, clearly following Chavez’s orders. So far, two other Governors have followed suit.

At the beginning some saw this as simply another legal misstep by an overeager regional Governor in his efforts to please Chavez. I disagreed. Too many times I have seen this Government start something only to gauge reaction and see whether to move forward or not. Coming after the Fuerte Tiuna meeting, this seemed to be no innocent move by a regional Governor. Unfortunately events have proven me right. Where I did make a mistake was in thinking that the British farm had been included for “balance” and that it would be Venezuelan owned farms that would be the target of the first interventions. Nothing has been further from the truth, which may be interpreted as the beginning of a new stage in this “revolution” with the Government ready for the first time to ignore international opinion.

The issue is simply political and emotional; who can disagree with the Government promoting production in unused lands, the minimization of large land states and determining the rightful ownership of land in Venezuela? But the truth is the Government is the biggest lawbreaker in Venezuela. According to a recent study by the Venezuelan Ministry of Agriculture, there are only 2.1 million productive hectares of land in Venezuela. But the Venezuelan Land Institute (INTI) owns 8.6 million hectares of arable land in 1,492 properties across the country. Thus, if the Government distributed this land among the estimated 660,000 rural families, it would give each one 13 hectares of land or 32.5 acres to each rural family. If this were an economic issue it would start right there. In fact, the cost of producing one season of crops is probably larger than the cost of the land for most crops.

To make maters even worse, of these 1,492 states, 53 of them have a total of 5.9 million hectares giving them an average of over ten times the definition of what a large farm state or latifundio is. Thus, if the Government really wanted to be revolutionary, it could give away only 30% of its own land and that would represent land equivalent to all of the productive land in Venezuela today!

But the whole process is simply a mockery, as legalities are simply set aside or in the words of the Governor of Cojedes “social needs are above legal technicalities”. Not only do Governors not have the legal power to do what they are doing according to the Land Bill, but other aspects of the law are also being violated. First of all, not all of the farms “intervened” in Cojedes are above 10,000 hectares in size. Second, ownership is sometimes being questioned, but only partially, but the whole farm will be intervened; some of the intervened lands have ownership and crop certification by the land institute and “unused” land is being defined as land invaded by squatters over three years ago without the Government making any effort to remove them.

Agroflora, the British company that owns Hato El Charcote actually published a full page ad in today’s newspapers saying that: 1) The old Agrarian Institute recognized in 1972 and 1978 the private nature of this farm. 2) The new Land Institute (INTI) recognized in 2003 the “clear and uninterrupted” chain of ownership of Hato El Charcote. 3) The land known as “El Charcote” owned by Dictator Juan Vicente Gomez was recovered by the Venezuelan Government in 1936 and is not related to Hato El Charcote. 4) The chain of ownership of Hato El Charcote has been uninterrupted since 1830. 5) They aim to prove the land is in use or invaded with the process.

This is probably all true, but in the end it does not matter to a Government that cares little about legality or economics. This is simply about gaining popularity via the use of highly charged emotional and complex issues, which are hard to explain or understand. This is what populism is all about.