In Venezuela, the Newest State Business Is a Dairy

In the expansive plant here, where milk and juices are pasteurized, refrigerated, packed and shipped, workers in hard hats and white coats said the new ownership has not translated into a major transformation. Save for Herrera, the new president, the production managers remain the same as before. Workers had kind words for the old owners, but several said they agreed with the new philosophy of focusing on milk production.

"We're seeing now that there's more milk," said Carlos Escalona, one of the workers. "You can see the milk in the stores."

It is still too early to determine whether the mounting production at Los Andes will have a major effect on nationwide milk supplies. The company's goal -- about 53,000 gallons a day -- amounts to just 5 percent of national production. Academics and economists who have studied Venezuela's agricultural sector doubt there will be any large-scale impact.

"Why don't they preoccupy themselves in increasing the production of oil instead of producing milk?" scoffed Carlos Machado, an expert on agriculture, referring to Petroleos de Venezuela's role at Los Andes. "What if milk producers were now starting to produce oil?"

A recent poll by Datanalisis, a Caracas polling firm, showed that Venezuelans have been concerned about the president's approach. More than 70 percent of respondents disapproved of how the government has handled food supplies, up from 42 percent in October.

Academics and food producers, meanwhile, say farmers and cattlemen are reluctant to invest in a country where price controls cut into profits and where land takeovers are a prominent feature of agricultural policy.

"It's a consequence of the government's policy of hyper-intervention," said Machado, who studies agriculture for the Institute of Superior Administrative Studies in Caracas and wrote the recently published book "Food Consumption in Venezuela."

"This has gone badly for governments that have done this in the past," he said, referring to the countries in the former Eastern Bloc, as well as North Korea and Cuba.

In Venezuela, price controls have been imposed on dozens of products, and economists and food producers say those controls have reduced production and generated a dramatic rise in imports. The country's cattle herd, for instance, contracted from 13.5 million head in 1999 to 12.6 million now, as population spiked from 23 million to 28 million. Imports now account for about 70 percent of all the meat consumed in Venezuela.

The system Venezuela has created means occasional shortages of basics, while those products whose prices are not state-mandated, like fruits and vegetables, have shot up in cost. At high-end grocers, shortages are evident in the lack of certain cuts of meat. In poor neighborhoods, it means long lines at state-subsidized markets.

The lack of milk has been perhaps what has most agitated consumers.

"There isn't enough milk, and you cannot invent it," said Roger Figueroa, president of the country's largest association of dairy producers. "We produce 40 to 45 percent of what we consume, and the rest has to be imported."