Chávez Increases Corn Prices, Announces Shift From Oil to Food in Venezuela

James Suggett, April 27th, Venezuelanalysis.com

Mérida, April 26, 2008 (venezuelanalysis.com)-- The president of Venezuela, Hugo Chávez, announced Thursday that the regulated prices of corn and sorghum will be raised by 30% and that a new Socialist Agricultural Development Fund (FONDAS) has been launched to promote national food production.

“The day will arrive when, just like we send petroleum to other countries, we will be able to do the same with corn, because severe hunger continues to grow [worldwide],” the president stated.

Venezuela produced 2.2 million tons of corn last year, which represents a 300% increase in national corn production since 1999, Chávez declared. He recounted that corn production had fallen in the decade prior to his election from 1.2 million tons in 1988 to 980,000 tons in 1998.

Nicolás Constatino, the president of the Venezuelan Corn Flour Industries Association, which has made several appeals for an increase in the regulated price of corn, said the new adjusted price should actually be 25% higher than it is, and that the price of corn flour should now be increased by 29% to maintain equilibrium, if the country is to satisfy its growing internal demand in 2009.

Chávez assured that in addition to increased prices, corn producers will be offered a per-kilo subsidy, low interest rates on credits, and certified seeds with the help of the new 26 hectare (64 acre) “socialist” genetic technology center in Barinas state, from which Thursday’s announcements were made.

Also, Venezuela will continue to receive tractors and other agricultural technology from Argentina and plans are underway to build a tractor factory with assistance from Iran, Chávez mentioned, emphasizing his gratitude toward these nations for their cooperation in Venezuela’s efforts to achieve food security.

The head of state also referred to the United Nations’ call for increased world food production to help alleviate the food crisis that has spurred riots and protests in 33 nations. “The FAO (Food and Agriculture Organization) called on all the countries in the world to produce more food, and in this we are already moving forward,” Chávez boasted.

He highlighted that general food production in Venezuela has risen by 2.3% annually during his presidential term, compared to .9% during the decade prior. This is good, but not good enough, because producing enough for national consumption plus exports “is the ideal and we are going to achieve it,” the president said.

However, the president of the National Federation of Cattle Producers (FEDENAGAS), Genaro Méndez, said the government “presents statistics that do not correspond to reality.”

According to Méndez, the dairy industry in the country is at a “standstill,” and beef production decreased by 100,000 tons last year, in contrast to government figures. “I ask that the national government tell the truth to the producers in the country,” Méndez said.

But Vice President Ramón Carrizalez assured in an interview that the government has boosted its research efforts on the entire food supply chain, and now has an accurate assessment of 80% of the national situation.

Carrizalez said this is part of the “permanent” process of “Revision, Rectification, and Re-advance,” the “three Rs” which have characterized the period following the electoral defeat of the constitutional reform proposal last year.

With regard to food, the government “has had to make changes because we realized we were wrong in some things… we did not eliminate the bureaucratic obstacles like we believed… we are permanently self-criticizing and correcting, but what I can for sure guarantee is that we have advanced.”

According to Carrizalez, the government does not want to isolate the private sector, but rather has “been in a process of frank conversations” with private businesses. The private sector has been right in some cases, prompting the government to improve the situation by lifting price controls on certain products and reducing obstacles to imports, Carrizalez recounted.

“There exists a serious private sector that wants to resolve problems, that wants to converse with us. We do not ask that they come politically in our direction, no, what we want is a nationalist attitude. With them, we want to work,” the Vice President told Panorama newspaper.

The government’s goal is to have a 3 month reserve supply of food by the end of this year, Carrizalez said. He insisted that the situation in Venezuela be understood within the context of the global food crisis, which has caused world food reserves to drop to a 30-year low, according to the director of the World Food Program Josette Sheeran.

President Chávez said Thursday that the method for achieving its goals is “socialism,” which is “the future.” He pointed out that the government has nationalized large, idle estates and turned them into Socialist Production Units (UPS) “with their own economic model” based on “social property, which is not private property, it is for everyone.”

Now, it is the workers’ responsibility to transform production from capitalist to socialist, the president said. He called for the creation of a “National Socialist Farmers Front” of agricultural workers, who “should possess a conscience of social duty and exercise this for the collective benefit.”

Reflecting on the future development of Venezuela, Chávez stressed that “we should move away from the oil-based production model. The future of the country is in the land, in the agricultural project, not in petroleum. Food production is the most important.”

LATIN AMERICA: Reconciling Oil and the Environment

Humberto Márquez, April 19, IPS

CARACAS, Apr 19 (Tierramérica) - Years of public scrutiny, ever-newer technologies, more government regulations, notions of corporate responsibility and the market-driven need for greater efficiency are all factors behind improvements in the environmental policies of Latin America's petroleum industry.

"Our line makes it incompatible to exploit the underground riches as long as above ground people are living in poverty," says Juan Bravo, manager of the environmental wing of Venezuela's state-run oil company PDVSA in the Orinoco belt in the southeast.

For decades, oil and natural gas exploitation in Venezuela polluted fields, rivers, lakes and cities, and fostered the growth of poor settlements around the installations where the country’s oil wealth was produced.

But since the industry was nationalised in 1976, no fossil fuel deal has been approved without including projects for social improvement and environmental preservation. In laying a natural gas pipeline between northern Colombia and northern Venezuela, PDVSA spent 15 million of the original 150 million dollar investment on community development programmes in the areas the pipeline crossed.

In the Orinoco belt, an area of around 55,000 square kilometres holding an estimated 1.2 trillion barrels of extra heavy crude, at least one-fifth of which is believed to be recoverable, the PDVSA and some 30 foreign corporate partners pump half a million barrels per day.

"To a large degree, the environmental achievements are due to the new codes of conduct for global energy companies. They don't enter into any deal without seeing the state of the land and without conducting environmental hearings," Venezuelan petroleum engineer Diego González told Tierramérica.
For example, unlike the conventional oil fields in eastern Venezuela, cluttered with thousands of vertical oil pumps, oil is now extracted horizontally: when the drill reaches the level of the petroleum deposit underground, submergible pumps draw out the crude from various points, without altering the surface landscape, González explained.

In Brazil, the state oil giant Petrobras "conducts monitoring projects that evaluate the environment before implementing the drilling or production efforts," particularly in the Atlantic Campos Basin, northeast of Rio de Janeiro, the company said in a written statement to Tierramérica.

The studies "identify restrictions for the location of the units (drills and pipelines) where there are important ecosystems, like deep-water coral reefs, in order to propose alternatives with fewer environmental impacts. Furthermore, all effluents are monitored, such as the water used in production, sanitation effluents, rubble and fluids from drilling," stated Petrobras.

In Ecuador, heavy environmental damage has been caused in the Amazon region by ChevronTexaco over a quarter century, which could mean compensation payouts of seven to 16 billion dollars, the equivalent of the corporation’s annual earnings, according to experts in Ecuador.

The pollution, caused by more than 600 petroleum waste pits, triggered the emergence of a vast ecological movement with international support to fight oil drilling in the Amazon's Ishpingo, Tambococha and Tiputini fields -- in which Brazil's Petrobras is also interested -- in order to protect areas of the National Yasuní Park.

"Cases like Brazil and Ecuador tend towards efforts to avoid oil spills, for which technology is constantly being improved. In part, we owe this to the start of production in the North Sea more than 30 years ago," González told Tierramérica.

In contrast to the large-scale oil exploitations that in Mexico, Venezuela, the Persian Gulf or the former Soviet Union preceded environmental concerns and legislation, those of Britain and Norway in the North Sea started in the 1970s and had to heed strict environmental standards.

In addition, to make petroleum production profitable in that area and to avoid wasting even one barrel, the companies had to develop safe and modern technologies, which regulators in other countries then began to require as well.

Oil spills continue to be a headache for companies like the state-run Petróleos Mexicanos (Pemex), which faces a serious decline in its oil fields and which spends one percent of its 17 billion dollar budget on environmental matters.

Of the 24,000 barrels of oil that Pemex spills on average each year, one-third are the result of illegal tapping of its pipelines, according to the company. Environmental groups identify Pemex as the most heavily polluting company in Mexico, responsible for 57 percent of the country's environmental emergencies.

In the company's code of conduct, the first item is "to respect and improve the environment", and its 155,000 employees are prohibited from "considering production more important than ecological balance."

Venezuela's PDVSA drew up management plans for the 28 blocks into which the 21,000 square kilometres of the currently exploited portion of the Orinoco belt are divided.

New maps and recognition of areas "allow decisions about the best sites and routes for the installations, roads or pipelines, but also for work as a project with each field, beginning with reforestation to capture carbon dioxide (a greenhouse gas), while oil activity continues," said PDVSA's Bravo.

González noted that "the storage of crude no longer brings problems, because each tank or pump station has to have a walled-in space to contain spills equivalent to one-and-a-half times its storage capacity."

But the production of heavy crude in the Orinoco belt to convert it into lighter synthetics "generates new environmental problems because they have a high content of sulphur and metals, which must be stored or transported for sale, but whose markets aren't as easy to reach as the oil markets," he said.

The Orinoco belt's daily output is 600,000 barrels -- one-fifth of Venezuela’s total -- and each day produces 1,600 tonnes of residual sulphur and 14,500 tonnes of petroleum coke.

The coke is an input for the steel industry and is sold within Venezuela, while the sulphur derivatives are exported for use in fertiliser, agrochemicals, vulcanised rubber, dyes, etc. But storage and transport have their own financial and environmental costs.

"If the aspirations of this government are achieved, of producing (in the belt) up to four million barrels of crude a day, it would leave more than 10,000 tonnes of sulphur and almost 100,000 of coke per day," said González.

PDVSA invited companies from Argentina, Brazil, China, India, Iran, Russia, Spain and Uruguay to help certify that 236,000 billion barrels of crude are extractable, which would mean Venezuela holds the largest oil reserves on the planet.

(*Additional reporting by Mario Osava in Brazil, Kintto Lucas in Ecuador and Diego Cevallos in Mexico. Originally published by Latin American newspapers that are part of the Tierramérica network. Tierramérica is a specialised news service produced by IPS with the backing of the United Nations Development Programme and the United Nations Environment Programme.)

Chavez flags oil-fired push in Pacific

Mark Dodd, October 20, The Australian

The Government of international pariah Hugo Chavez has signalled a challenge to Australia's influence in the Pacific with an aggressive diplomatic push based on cheap fuel for island states.

Speaking on the sidelines of the 38th Pacific Islands Forum in Tonga yesterday, Venezuela's Vice-Minister of Foreign Affairs for Asia, Middle East and the Pacific, Vladimir Poljak, said his Government was ready to help end the West's "domination" in the region.

In a further challenge to Australia -- one of the region's biggest aid donors -- Mr Poljak said Venezuela did not need the "permission" of bigger countries to establish contacts in the Pacific. Oil-rich Venezuela was granted observer status at the forum by host nation Tonga, despite international disquiet over Mr Chavez's ties with Iran and communist-controlled Cuba.

Mr Poljak seized the opportunity to court influence among the 15 nations represented at the forum. "I really want you to rest assured Venezuela has a very aggressive energy-(linked) political philosophy," he said. "Venezuela wants to end the use of fuel as a weapon of domination over smaller countries."

Since coming to power in 1998, Mr Chavez has embarked on a program of populist Left-leaning economic policies that challenge US pre-eminence in Latin America and now, apparently, the Pacific. The Chavez Government's decision to nationalise most of Venezuela's oil industry has led to prices there falling as low as 9c a litre, making it among the cheapest in the world. Asked how Venezuela might be able to help Pacific states, he suggested moves to tie them to the Chavez Government through cheap fuel.

"We can say our oil in Venezuela is used as an instrument of liberation because our oil policies are truly independent," he said.

"We have two choices: either we use it and be selfish about it or we use it and help others with it.

"We've used our oil to fund schools, health and research for the people. So I think our presence here at this forum really shows the true interest Venezuela has towards the Pacific.

"One of the things we are thinking of for Pacific countries is for them to have a storage space for their fuel and petroleum."

He did not say where or when the facility would be built but confirmed there had been approaches in recent months by Pacific states interested in securing closer economic and diplomatic links with Venezuela.

The Pacific Islands Forum ended yesterday amid confusion about the strength of its biggest achievement -- an agreement by coup leader Frank Bainimarama to return Fiji to democracy.

On Wednesday, Foreign Minister Alexander Downer and New Zealand Prime Minister Helen Clarke welcomed an agreement for elections to be held by March 2009, but on Thursday Commodore Bainimarama threatened to amend Fiji's constitution in an apparent bid to prevent Laisenia Qarase -- the prime minister he deposed in December last year -- from contesting the poll.