PRESIDENT MAKES IMPORTING FOOD MORE DIFFICULT,

C O N F I D E N T I A L CARACAS 000686

SIPDIS

HQ SOUTHCOM ALSO FOR POLAD
COMMERCE FOR 4332/MAC/WH/JLAO
TREASURY FOR RJARPE
NSC FOR RKING
SECSTATE PASS AGRICULTURE ELECTRONICALLY

E.O. 12958: DECL: 05/20/2026
TAGS: EAGR ECON ETRD PGOV VE
SUBJECT: PRESIDENT MAKES IMPORTING FOOD MORE DIFFICULT,
ESPECIALLY FOR SELECTED COMPANIES

Classified By: Randall Hager, Agricultural AttachQ, for reasons
1.4 (b) and (d)


1. (C) SUMMARY: The Director of Communications for
Venezuela's foreign exchange committee (CADIVI) informed
wheat and pasta industry representatives recently that three
leading companies will be excluded from the "Pago a la Vista"
(cash payments) system, which eases bureaucratic procedures
for trade, by order of President Chavez. Although not yet
critical, local availability of staple pasta products could
suffer as this and other recently applied measures continue
to delay wheat imports, much of which come from the United
States. END SUMMARY.


2. (C) According to Richard Dalke (protect),president of
the local wheat association ASOTRIGO, he and several industry
representatives were told during a meeting on May 19 that,
per a direct order of President Chavez, CADIVI would remove
Alimentos Polar, Cargill, and pasta producer Sindoni from the
list of companies eligible to use "Pago a la Vista," making
their imports of food products, including wheat, more
difficult and costly. Pago a la Vista is an expedited
payment system that speeds up procedures necessary to obtain
foreign exchange, allowing companies to negotiate effectively
with their suppliers. This is in sharp contrast to the
several months often required to obtain foreign exchange
through the standard system.


3. (C) In addition to this abrupt notice, Dalke reported
that Venezuela will now again require onerous
"non-production" certificates, forcing an importer to prove
that Venezuela produces no wheat before any foreign exchange
request is approved. COMMENT: The renewal of this
requirement is unnecessary as Venezuela's wheat production is
minimal, and has no real market impact. This action is
simply a bureaucratic trap. END COMMENT.


4. (C) According to Dalke, incompetence and revolutionary
fervor were also on display at the meeting. After a balanced
presentation on the need to approve wheat imports quickly to
avoid shortages, the Director became quite angry, loudly
complaining that the industry was taking its message directly
to the press, instead of informing government authorities
first. She also claimed that "Venezuela would soon be
exporting wheat to the world." The representatives responded
calmly with copies of correspondence supporting their message
sent over the past three months to CADIVI and several BRV
Ministries. COMMENT: The revolutionary message from the
top, i.e., that Venezuela will soon be at least self
sufficient, and later export food to the world, is faithfully
parroted by lower level officials. Unfortunately,
bureaucratic competence in technical matters lags far behind
that of mimicry. Regarding the three targeted companies, we
can only surmise that government harassment against the
private sector is still the marching order. END COMMENT.


5. (C) Although not critical, Dalke reports that some pasta
producers are seeing raw material inventories shrink, and at
least one company has had to borrow stocks from another to
keep its plant operating. As a result of the industry's
continued lobbying of the government, officials are
attempting to clear paperwork for previously approved
cargoes. Several ships from the United States have been
waiting since May 14 to sail, and importers are now paying
significant demurrage while they wait for government import
approvals and foreign exchange requests to clear. COMMENT:
It appears that the wheat and pasta industries have been
effective in calling attention to a potential shortage of
wheat, and we believe that the BRV will not allow the
situation to become critical. However, they appear to be
making it as hard as possible for several leading companies
to do business.
CAULFIELD