Tales Of Bolivarian Inefficiency I: Sugar Processing Plants

April 26, 2014


Coming to Caracas, one is bombarded with stories. Just watching Maduro in his now almost daily tirades on how he will restart the economy and save it from economic war, would give enough material for what has become a truly bizarre dictatorship, presided by someone who has no ability to diagnose neither the problems, nor the solutions to the mess created by the revolution.

But one area that has caught my attention is the ability by the Bolivarian revolutionaries to disregard or dismiss the many failures of the revolution and describe how they will certainly fix things going forward. Sometimes they don’t even bother to acknowledge that the mess created is their own, talking as if some other Government or group of people was responsible.

Maduro is the first one to talk like this. This week, he has talked about a “new economic model” and the launching of a new age of powering local production, as if it was some Martians that replaced local production with cheap imports subsidized by cheap foreign currency, while the private sector was obliterated, persecuted and nationalized by the Bolivarian revolution.

But there were some announcements this week or during Holy week, or stories, which simply need to be told as they perfectly exemplify and describe the inefficiency and improvisations of the Chavista revolution.

Part I: Sugar Production and Processing

Sugar and sugar cane processing was one of the first areas in which the Chavista revolution decided to intervene some thirteen or fourteen years ago. The Government did two things: It nationalized existing sugar processing plants and imported others from Cuba and under Cuban “expertise”. The argument was not only that the Government could do a better job, producing more and cheaper sugar, but that it would eliminate monopolies and stop the exploitation workers.

Move forward thirteen years and Government plants barely produce 26.7% of the sugar in Venezuela and the companies were losing so much money that the Government last year decide to “restructure” CVA Azucar, the holding of the processing plants in order to make it more efficient. Except that was simply an excuse. By eliminating CVA Azucar and replacing it with the “new” and improved Corporación Venezolana del Azucar (Coincidentally also CVA) what the Government is doing is bypassing its own decrees, which do not allow you to fire anyone. Unless, of course, the company is being shut down.

Thus, the Government that wanted to eliminate the “exploitation” of the workers, is using this legal subterfuge to fire workers and eliminate unions, as both the unions and their leaders were part of the now extinct company.

Nice trick, no? You fire workers and get rid of unions all in a single and somewhat fictional stroke!

Oh! The pretty revolution!

And this is all happening because these companies, which were emblematic of the Chavista revolution, became bloated by cronyism, inefficiency and disregard for productivity and profit.

In fact, General Wilfredo Silva, the President of the recently created new and improved CVA, defended the practice and described how inefficient these companies were. All said, as if the original companies had been bloated and created by a different Government.

The General gave the example of how in Brazil, a sugar processing plant which processes 9.6 million Tons a year, does it with only 390 workers. In contrast the Central Portuguesa plant, which processes 3.6 million Tons, does it with almost twice the number of workers with 700. Or the Sucre Central, which processes 288,000 Tons also has 700 workers.

But there is no remorse. According to the General, the Socialist system under the revolution is the correct one and under his new management, which may last just a few months if experience is any indication, what has not happened in 14 years will magically happen now. There is no reason to return the expropriated plants to its rightful owners to continue “exploiting” the workers.

Sure General, because we can think of so many successful examples under the revolution of successful enterprises, except we can’t really recall the name of a single one…

Next: part II: New Steel Projects…The “New” Venezuelan Steel Industry

17 Responses to “Tales Of Bolivarian Inefficiency I: Sugar Processing Plants”

  1. […] Tales Of Bolivarian Inefficiency I: Sugar Processing Plants […]

  2. HalfEmpty Says:

    I am pushing 60 and frustrated that I won’t see the dawn of Venezuelan industry. Boys…. there’s money to be made there eventually and that’s a good thing. Right now your leadership is indeed screwing up a pissup in a brewery, but that will change. Hold out if you can.

    • N5 Says:

      Any idea how long for? Granted the economy is a mess but this is a Cuban controlled petro-narco-state now under Putin umbrella! Where’s the crystal ball?

      • djhowie Says:

        As once quoted by the late Kenny Everett (showing my age!) in his comedy sketch as an army general … “Round ’em up, put ’em in a field and bomb the bastards!!” A bit harsh, but seems the only solution to me at the moment.

  3. concerned Says:

    Everyone has heard the phrase “Turning sugar to shit”. They have done it to everything they have touched, but in this case it truly fits. As noted in your post, they develop amnesia accepting no blame for the destruction, and if allowed will rewrite history to wash their hands. Posts like yours documenting their actions is the best way to prevent that. Keep it up.

  4. Kepler Says:

    Great, Miguel.

    Just in case, I added some stuff on a couple of industries in the Wikipedia article Economía de Venezuela:
    There you can find some links to El Universal and other sources.
    And if anyone of you wants to contribute, it would be nice if you add there papers, articles about the collapse of all those Venezuelan industries.

    Later I will produce charts based on the data to help the students distributing flyers about Venezuela’s economy

    • Ronaldo Says:

      Nice article Shillary,
      A 25 year low on Vzla oil imports into the U.S. Really nice.

    • fred Says:

      Breitbart??? are you kidding? have some self respect.

      • Not Fred Says:

        Q te pica Fred? Q Andrew Breitbart was partners with Matt Drudge hosting his content? That is success and influence beyond your wildest dreams. Have some respect for the dead and come up with something better next time.

  5. Boludo Tejano Says:

    A while back there was a video with an non-professional Polar employee who said that he didn’t want his company nationalized. Why? All the disasters resulting from other companies being nationalized, he said.

  6. m_astera Says:

    We all know sugar is bad for our health, right? So they are doing us a favor.

    • Antonio Says:

      Rum production is endogenous and vital for the national folklore and traditions than sugar. By all means, make rum, not sugar. Rum will make you free! There is no danger of becoming more dependent on imperialist Cuba: they can’t produce either sugar or rum in quantifiable quantities. Cubans would have better teeth if they had decent dentists.

  7. CarlosElio Says:

    Failure is part of the design of the chavez cult. In the chavez cult, the only criteria of success is the amount of ass kissing offered to the top honcho. It is a property of all autocratic system. These days pictures of generals and other underlings with little notepads jotting down any thing Kim Jong-un says have been published and commented in many sites. It doesn’t matter what the boy with the bad haircut says, the point is to appear you are eagerly capturing his wisdom in your notepad.
    If the criteria of success is to kiss ass and make sure all those around you know it, electrical loads, chemical balances, inventory level, maintenance and all other myriad factors that need management attention for the success of the processes under your supervision will be neglected.
    Failure is endemic across all government instances. But it doesn’t matter as long as their snouts smell shitty and look brown.

    Ass kissers will never a good company run.

  8. Kenneth Price Says:

    Why should Venezuela be any different from other “socialist” countries. I generally consider that any such company has twice the number of workers needed, and produces half the amount their capitalist competitors can. Eventually, most (if not all) such companies either close, or require massive injections of additional capital, if they are to survive.

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