It really takes a certain amount of cunning, if not good sense, to turn a coffee exporter, one acknowledged to produce some of the finest Arabica in the world, into a place where it is now difficult to get a cup of coffee. But that is indeed what Hugo Chavez has just managed to do in Venezuela. How is it possible to do this?
Well, first set the price at only half what it is in neighbouring Colombia. Then watch as some 250,000 quintales (around 100lbs in a sack) get smuggled over the border into that country. Then gasp in amazement as less coffee is harvested domestically, the crop falling from the usual 1.5 million quintales to 1-1.2 million. Then congratulate youself on how you’ve been able to make coffee cheaper for the masses: demand has risen to 1.8 million quintales.
The final coup de grace is of course that you’ve got to go and find some more coffee somewhere:
Most estimates of how much Venezuela needs to import hover around 300,000 45-kg bags, to ensure supply until the 2009/2010 harvest begins in October. Experts say Brazil would be a likely supplier.
“We’re talking about two months of supply,” Nelson Moreno, head of the small and medium-sized roasters, told Reuters.
“Stocks, including reserves, will be entirely depleted by the third week of August,” Moreno said.
For, you see, having fixed the price so that supply and demand cannot balance, you cannot use the price system to either ration the coffee, dissuade people from consuming it nor encourage private individuals to import it: or not export it illegally in the first place.
All Hail the Glorious Bolivarian Socialist Revolution!
As Johan Norberg points out in connection with this story, PJ O’Rouke, as so often, had it right:
The only thing you need to know about socialism is that you can´t get good Chinese takeout in China and that Cuban cigars are rationed in Cuba.