AGRICULTURE-VENEZUELA: Mixed Feelings Towards Admission to Mercosur

By Humberto Márquez Reprint | | Print |

Humberto Márquez

CARACAS, Apr 10 2006 (IPS) - Farmers in Venezuela have begun to take a closer look at their country’s admission to the Southern Common Market (Mercosur) trade bloc, made up of Argentina, Brazil, Paraguay and Uruguay, with mixed feelings.

“In terms of farm machinery and equipment, and markets for fish or rice, Brazil and Argentina offer Venezuela good opportunities,” Gustavo Moreno, the president of the National Confederation of Associations of Agricultural Producers (FEDEAGRO), told IPS. “But it is unlikely to benefit those who grow corn.”

On the other hand, large corn consumers, like cattle breeders, “would benefit from cheaper cereals, which would permit the fattening process to be completed when the animals are younger, and thus enable us to obtain a better product,” stockbreeder Jorge Ordóñez told IPS.

The four members of Mercosur invited Venezuela to join as the fifth full member in December, although the actual admission process will take several years. The negotiations are to begin on May 15. For now it basically has a voice but no vote.

Mercosur is strong in agribusiness production – in beef, grains and dairy products – while oil-rich Venezuela depends heavily on food imports.

Venezuelan President Hugo Chávez has accelerated joint projects, such as a natural gas pipeline to run from Venezuela’s Caribbean coast to the Rio de la Plata estuary between Argentina and Uruguay. He has also pushed for deeper integration in the bloc, with a stronger accent on social questions.

In a seminar on “Venezuela’s Integration in Mercosur: Opportunities and Threats for the Agribusiness Sector”, organised by FEDEAGRO on Apr. 5-6, Venezuelan Minister of Integration and Foreign Trade Gustavo Márquez said “we are in favour of South American trade, but it should not hurt national production.”

“In the negotiations, Venezuela cannot ignore its constitution,” which guarantees food security while favouring domestic production to achieve it.

Furthermore, in the negotiations, “which will be a global, rather than sectoral, process, Venezuela will demand special and differential treatment, in line with what we demand from industrialised countries, so that (admission to Mercosur) will not affect the country’s economy,” said Márquez.

The minister commented later to IPS that “there are structural asymmetries. Ignoring the power of Brazil, the world’s eighth largest economy, or the enormous advantages of Argentina, would be like trying to block out the sun with your finger. That is why we signed the economic complementarity agreement, which establishes the need for time for us to adapt to the measures.”

For his part, Moreno remarked, “when it’s time to negotiate with Mercosur, Venezuela shouldn’t just take along a chequebook for making purchases, it should also bring a receipt book – in other words, take advantage of its strength in the energy sector in order to benefit in others, such as rice, cacao, coffee or bananas.”

Márquez pointed to the example of Colombian coffee growers, noting that although they number in the thousands, they join together to export under a single brand name, “Colombian Coffee.” He called on Venezuelan farmers to do the same.

In the Venezuelan dairy sector, which already faces competition from imported cheese from Uruguay, “there is a great deal of uncertainty,” said dairy industry spokesman Rodrigo Agudo, “because Mercosur’s surplus production alone is three times the current Venezuelan demand.”

“If price bands are not going to be implemented, then we’re heading towards a neoliberalism as savage as with the FTAA (Free Trade Area of the Americas, a hemispheric free trade initiative promoted by the United States), because there are transnational corporations like Serenísima and Nestlé (both food industry giants) operating in Mercosur, which would benefit from the opening up of our market,” Agudo told IPS.

Genaro Méndez, president of the Venezuelan Cattle Farmers Federation, stressed that “the farm gate price (paid to the producer) for a litre of milk is 18 cents of a dollar in a Mercosur country, and 35 cents in Venezuela. We currently cannot compete.”

Cattle farmer Ordóñez maintained that Venezuelan beef producers can afford to feel less concerned, “because despite the fact that 36,000 tons of beef were imported in 2004 and 2005, we managed to survive thanks to the increase in consumption, up to 18 kg per person a year.”

“In addition, we can improve the quality of our product with cheaper feed grain, and also sell more if the rise in buying power among Venezuelans continues, but a great deal depends on macroeconomic policies. We would do better with a slight devaluation of the bolívar (the Venezuelan national currency),” added Ordóñez.

Moreno emphasised that “although there was practically no debate in Venezuela about joining Mercosur, we want to actively participate, but we need more information about the lines of negotiation, and not just vague, general statements about the Constitution.”