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Tough Times for Venezuelan Meat Industries

by 5m Editor
12 August 2009, at 8:31am

VENEZUELA - Domestic meat production is lagging behind fast growing demand for meat, and imports are meeting the growing gap. The country's modern poultry industry has fared better than the beef sector, for which the outlook is bleak.

BMI's Venezuela Agribusiness Report for Q3 2009 includes the new Livestock Outlook, reports companiesand markets. As with most industrial sectors in Venezuela, livestock production has been profoundly affected by President Hugo Chavez's Bolivarian Revolution. Strong growth in meat production in the early years of the decade was brought to a swift halt by the sharp recession in 2002 and 2003. Hopes of a quick recovery for the sector were dashed by the imposition of government price controls on food staples – including meat – in an effort to improve the living standards of the country's poor. The price controls and a return to strong economic growth saw demand for meat quickly recover to pre-recession levels. Meat production, however, has lagged far behind.

Producers forced to sell at the government-mandated level have struggled to turn a profit. This has been a major disincentive to investment in the livestock sector. Investment has been further discouraged by the threat of seizure and nationalisation by the government. Livestock farmers' difficulties were compounded by the rapid rise in feed costs through 2007 and 2008. In 2007 alone, beef production fell by 23.3 per cent year-on-year as established farmers left the business and new government-backed collectives struggled to get started. While production has been falling, demand for beef rose ever higher as oil-fuelled growth saw incomes rise. This has made Venezuela ever more reliant on beef imports, which rose from 2,000 tonnes in 2000 to 320,000 tonnes in 2008. While the recession in Venezuela will see imports fall this year and next, the move from self-sufficiency to a major net importer in only a few years shows the crisis beef production is in. Unless President Chavez can work a miracle with the new collective farms or farmers are allowed to make a profit without the fear of land seizures, the outlook for beef production over the next few years looks bleak.

Venezuela's modern poultry production sector has fared better than beef over the last few years. Growth, however, has also been held back by the price controls. In 2008, production was still well below the level seen in 2002 before the recession and price controls took their toll. In 2009, with feed costs still high, the report expects to see a slight decline in production.

Further Reading

- You can purchase the full report by clicking here.