Friday, January 13, 2006

Si, no tenemos unos cafes hoy

Hugo Chavez, using the same economic techniques that would rid the Sahara of sand, engineers the end of the coffee break [thanks to the scrivener]:

President Hugo Chavez's policy of keeping a tight control on food retail prices while doubling the price of raw coffee beans back in December may have backfired.

For at least a week, there has been no roasted coffee available on the shelves of Venezuelan supermarkets as wholesalers and coffee producers have been withholding their coffee from sale.

Since 2003, President Chavez has maintained a strict price regime on some basic foods like coffee, beans, sugar and powdered milk.

But this measure designed to curb inflation has alienated Venezuela's coffee producers who say their profit margins have been reduced to nothing.

Coffee farmers have seen a 100% increase in the state-controlled price of raw coffee.

However, the government has so far been reluctant to increase retail prices to a level acceptable to coffee roasters and traders.

The reaction by coffee companies has been to hoard tens of thousands of tonnes of coffee in warehouses in the hope that the government would eventually announce fair prices.

"You can't blame us for keeping the coffee to ourselves for the moment," says Eduardo Bianco, a senior executive at Cafe Madrid, Venezuela's largest coffee producer.

"Would you sell your products on the open market if you were sure you were going to make a loss?"

Government minister and coffee executives have been locked in long talks to try to resolve the deadlock.

Maybe Chavez will emulate one of his admirers and give his country a malaise speech, rather than allow prices to find their own levels and actually solve the problem with a stroke of his pen.

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