In the western state of Portuguesa in Venezuela, Roberto Latini has successfully planted over 300 hectares of corn and rice. Despite the challenging economic situation in the country, Latini was able to secure funding for fertilizers and seeds from an agriculture guild, which has been supporting farmers in the region. The crops are expected to be harvested in September, marking a significant turnaround in the production of these staple crops for domestic consumption. Thanks to loans provided by buyers, farmers have been able to invest in generators and other measures to combat utility cuts. This support has played a crucial role in revitalizing the agricultural sector in Venezuela.
Amid tight credit restrictions and inflation of over 50%, farmers in Venezuela are turning to guilds and crop-buying groups for loans. These loans, provided by at least six guilds in Portuguesa and 20 crop-buying groups nationwide, offer a lifeline to farmers who are unable to secure traditional loans from banks. The loans are often repaid with the harvest itself, but the terms can still be difficult for small growers to meet. Without more regular financing from banks, farmers warn that challenges will persist and some may be forced to close their operations. The agricultural sector in Venezuela has suffered a significant decline in production over the past decade due to price and currency controls, land nationalizations, fuel shortages, and failures in public utilities.
In 2019, President Nicolas Maduro implemented measures to ease currency restrictions, allowing transactions to be conducted in dollars. This move provided some relief to the Venezuelan economy. Additionally, he adopted orthodox strategies to combat inflation, including credit restrictions and reduced spending.
While the practice of “forward selling” crops is common in countries like Brazil, it is relatively new but gaining traction in Venezuela, according to local agricultural experts interviewed by Reuters.
According to local consulting firm Globalscope, farmers in Venezuela have access to approximately $330 million in bank loans. Much of this funding is directed towards small-scale export crops such as sesame and mung beans.
In comparison, government data from Bolivia and Colombia reveals that credit availability for farmers in those countries is between nine and twelve times higher than that of Venezuela.
Gerardo Mendoza, the head of local agricultural consultancy Agrotributos, expressed concern over the lack of financial protection for the agriculture and ranching sector in Venezuela.
The communications, agriculture, and finance ministries, as well as the central bank, did not provide any comments in response to requests.
In terms of agricultural output, the production of rice and white corn reached 1.2 million metric tons last year, which was a 29% increase compared to 2022. However, this growth is still significantly lower than the production level of 3.4 million tons a decade ago, according to data from agriculture guilds.
Giorgio Ruffato, who is a rice and corn grower in Portuguesa, is part of an association that provides support and funding to farmers. Ruffato explained that they offer assistance such as seeds, insecticides, machinery repairs, and storage services for the harvested crops. At his farm, he even has a small laboratory where he examines the crops for any damage caused by pests or fungi.
To repay their loans, producers either hand over their harvest or use their earnings from selling to processing plants. These plants pay them in dollars based on international prices. However, some small-scale producers still struggle to earn enough to repay the guilds.
According to farmer Cesar Tovar, many small producers will disappear, and some of them are already in debt to associations or companies. In order to cover his costs, Tovar had to sell some machinery. This situation, along with the 12-month inflation rate of 51.3%, could eventually affect consumers as well.
Economist Hermes Perez pointed out that any form of credit is burdensome, especially when combined with the costs of public services and taxes. These factors have the potential to impact prices.
In response to the poor infrastructure and frequent cuts to water and electricity, some farmers are making significant investments in roads and backup power sources. Luis Hernandez, a grower in the state of Apure, for example, had to resort to using solar panels to charge batteries due to difficulties in obtaining fuel.
Other farmers have also taken measures to overcome these challenges. Latini, for instance, uses transformers to ensure that his rice plants continue to receive water during power cuts. Ruffato, on the other hand, has repaired local roads to facilitate the transportation of crops.
Mayela Armas and Vivian Sequera reported from Turen and Caracas, with additional reporting by Nelson Bocanegra in Bogota. Julia Symmes Cobb and Marguerita Choy contributed to the writing.