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Production
Estimates and Crop Assessment Division |
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Production
Estimates and Crop Assessment Division |
July 6, 2005
Venezuela: Agricultural Overview
Background
Venezuela’s innate agricultural production capacity far exceeds current output levels given the vast untapped land and water resources that exist in the central Orinoco plain and in the lowlands of the southern state of Amazonas. According to the last official agricultural census in 1997, conducted by Venezuela’s Ministry of Agriculture and Livestock (MAC), at least 3.4 million hectares of land is suitable for farming, yet only 0.7 million are currently devoted to grain production. Irrigated land was also estimated at 575,000 hectares in 2000 by the United Nations Food and Agricultural Organization (FAO), but the comparative area devoted to irrigated rice in the country is only 125,000 hectares. It is uncertain how much of the nation’s irrigation infrastructure is operable and adequately maintained, but it is apparent that existing irrigation resources are being underutilized for grain production as rice is the only irrigated grain crop and it accounts for only 21 percent of total irrigated crop area. The scope for further expansion of Venezuela’s irrigation infrastructure is substantial, given the favorable topography of the central plain and the large number of rivers (over 1000) which dissect the country. In addition, Venezuela estimates it has at least 17.1 million hectares of pasture land, much of which lies in perfect juxtaposition to existing farmland. As Brazil has shown in recent years, rangeland can provide a ready resource for the expansion of cultivated crops.
FAO estimates
that there are roughly 400,000 farmers in Venezuela, but that the vast majority
of productive land is devoted to cattle pasture. The total area
devoted to major crops in Venezuela (including all of the major food crops)
amounts to less than 1.0 million hectares. This represents only 5 percent of
the total land devoted to agriculture, while pasture and cattle ranching
occupies the remainder. Major crops grown (in descending order of magnitude
produced) are sugarcane, corn, rice, bananas, sorghum, plantains, cassava, and
potatoes.
Grain Production
Venezuela lies between 1-12 degrees north of the equator and has a tropical climate with highly variable rainfall. The rainy season occurs between May and November, with the primary growing season coinciding with that in North America. Rainfall varies from slightly less than 500 millimeters (20 inches) in the coastal northwest to nearly 5000 millimeters (200 inches) in the southern tropical forested areas of the country. Most of the nation’s agricultural land receives between 1000-2500 millimeters (40-100 inches) of rainfall, and experiences regular episodes of drought and flooding. The primary grain crops produced are corn, rice, and sorghum. These are grown predominately in the states of Portuguesa, Guarico, and Barinas which lie in the country’s central plain (between the northern and southern highlands). The primary croplands are generally surrounded by vast areas of pasture and savannah, providing ample opportunity for future growth of cultivated area.
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Total area devoted to grains (corn, rice, and sorghum) in 2005/06 is estimated at 705,000 hectares, up 4 percent from last year, but well below the record of 1.2 million set in 1987. Marginal increases in corn and sorghum area are expected to lead to a slight increase in overall grain area and production. Over the past 18 years total grain area has fallen by 41 percent, while grain production has been highly variable – averaging close to 2.0 million tons. Grain consumption and imports have also been highly variable since 1987, a function of both changing economic conditions inside Venezuela and periodic weather-related crop problems. Grain consumption has averaged a little over 4.0 million tons annually, while imports have averaged a little over 2.0 million.
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The nation’s rice area reached its historical high in 1981, while corn and sorghum area peaked in 1987 and 1988 respectively. Grain production flourished during this period owing to government policy which discouraged imports and encouraged greater food self-sufficiency. Crop area devoted to all the major grains has fallen considerably since that time, with rice declining 49 percent, corn 39 percent, and sorghum 61 percent. Rice and corn yields, however, have shown steady improvement since the mid-1980’s, enabling grain production potential to stay relatively stable despite considerable loss in sown area. Corn yields have increased about 64 percent since 1987, registering an annual growth rate of 3.5 percent. Rice yields have increased 70 percent over the same period or an annual rate of growth of 3.9 percent. Sorghum yields on the other hand have shown little to no improvement, averaging close to 2.0 tons per hectare.
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Corn is Venezuela’s most important domestically produced food grain, accounting for 60 percent of total grain area in the country and 62 percent of grain production. USDA currently forecasts corn area in 2005/06 at 420,000 hectares and production at 1.25 million tons. The bulk of production is heavily concentrated in the central plains states of Portuguesa, Guarico, and Barinas. These three states alone account for about 90 percent of total corn production (according to historical statistics circa 2001 from the Ministry of Agriculture and Lands MAT but which are no longer being published or distributed publicly). Corn yields are relatively low by world standards, averaging about 3.0 tons per hectare, implying that little to none of the crop is irrigated.
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According to a
recent report (VE 5005 – Grain & Feed Annual) from the U.S. Agricultural Attache
in Caracas corn production in Venezuela is focused on white corn for human
consumption. Very little yellow corn is produced domestically. There were
intentions to heavily increase white and yellow corn production last year via an
extraordinary government financing program, however the plan has not been
successful and production figures have not shown significant changes. As a
result of heavy rains during the planting season, corn production in 2004/2005
is estimated at 1.2 million tons from a harvested area of 400,000 hectares.
Production in 2005/06 is not expected to increase due to continued low
prices.
There are two different markets for corn in Venezuela, the white corn market is for food and the yellow market is mostly for feed. Total consumption of corn flour has increased over the past four years in response to declining real incomes since corn flour is cheaper relative to other food products. In addition, the corn flour price is now controlled, and the government is supplying corn flour through its chain of food stores, MERCAL. Demand for yellow corn in Venezuela has been softening as hog and poultry production has declined due to unfavorable economic conditions. The local poultry industry has been facing competition from Brazil. Food products for the basic food basket have been imported duty-free through the government food purchasing entity called CASA. The industry reports that about 17,000 tons of Brazilian poultry were imported in 2004 and then distributed to the public at a substantial discount through MERCAL stores. Poultry production is heavily dependent on imported animal feed ingredients. In that sense, demand for grains could decline if the importation of poultry, which competes with domestic output, continues.
Rice
Rice is Venezuela’s second most important food grain, accounting for 18 percent of total grain area and 21 percent of grain production (milled-basis). USDA currently forecasts rice area in 2005/06 at 125,000 hectares and milled production at 425,000 tons. There are generally two rice crops each year, a summer crop planted in June/July and harvested in September/October, and the winter crop planted in October/November and harvested in April/May. Rice cultivation is heavily concentrated in the central plains states of Portuguesa, Guarico, and Cojedes. These three states account for over 99 percent of total rice production. Rough rice yields are relatively high by world standards at about 5.0 tons per hectare, implying that much if not all of the crop is irrigated.
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Rice production quadrupled in the 1970’s as the nation’s irrigated area expanded rapidly. But in the 1980’s rice production reportedly collapsed owing to a general lack of expertise in irrigation techniques coupled with poor maintenance and management of the irrigation infrastructure. In the late 1980’s the governments MAC department administered 24 irrigation projects covering 261,000 hectares, yet only 40 percent of the intended area actually received water. Reports indicate that rice farmers frustrated with inadequate technology, poor prices, and limited credit switched their attention to other crops. In fact, corn area in the mid-1980’s in the key rice producing states increased sharply.
According to the
USDA report cited above (VE5005) a recent three-year drought (2001/02 to
2003/04) in the main irrigation district caused a precipitous drop in national
rice production. Farmers reacted to the situation by reducing sown area by 30
percent during the period. However, stronger rice prices and better weather
conditions in 2004/05 led to a recovery in rice area, with milled rice
production estimated to have increased 20 percent over last year to 425,000
tons. Since the 1960’s Venezuela has been basically self-sufficient in rice
production, though 
marginal amounts were both imported and exported as needs
arose. The pattern changed about 15 years ago when the country began to
consistently produce rice surpluses, and averaged about 50,000 tons of exports
annually. This pattern was maintained even during the recent three-year drought
when production declined sharply.
According to the U.S. Agricultural Attache about 90 percent of domestic rice production is used for human consumption, with the remaining 10 percent used for animal feed. Per capita consumption was 15.2 kg in 2004 and is expected to increase slightly in 2005 as the government continues to control prices of primary food products and fund programs aimed at subsidizing food to the country’s poor. Rice consumption is estimated to go from 390,000 tons in 2004/05 to 410,000 in 2005/06. Figures from the Venezuelan Millers Association indicate that the Government, through the MERCAL chain, a government company created for the commercialization and marketing of food products at lower prices, distributes 45 percent of the table rice in the country, and nine of the main mills supply rice to this government entity.
Sorghum is a minor crop in Venezuela but it is the country’s most important domestically produced feed grain. It accounts for 22 percent of total grain area in the country and 17 percent of grain production. USDA currently forecasts sorghum area in 2005/06 at 160,000 hectares and production at 350,000 tons. Like the other grains the majority of production is heavily concentrated in the central plains states of Portuguesa and Guarico, with modest quantities grown in Cojedes, Aragua, and Barinas. The two primary producing states account for 82 percent of total sorghum production. Sorghum yields are relatively low by world standards, averaging about 2.2 tons per hectare.
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Sorghum was introduced in Venezuela in the 1970’s because of its ability to tolerate drought and highly variable rainfall. It was quickly adopted and production increased rapidly. In the 1980’s sorghum production exploded, as demand from a rapidly expanding poultry and pork industries outstripped availability. Sorghum area increased by roughly 70 percent during the 1980’s while production doubled. However, despite increasing production, domestic supply could not keep pace with internal demand, necessitating sizable imports. Sorghum imports at their peak in 1987 totaled over 1.7 million tons, more than double the size of the domestically produced crop. Domestic sorghum demand dramatically declined thereafter as the poultry and pork industry apparently began to alter their preferences and switched to corn for the bulk of their feed requirements. Imports of corn escalated dramatically as sorghum imports plummeted.
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Sorghum is still an important crop in Venezuela, especially in low rainfall and drought-prone areas. In addition, government-set guaranteed prices encourage continued planting, even with low yields, as less efficient producers can still make a profit. With every harvest there is a traditional conflict between sorghum producers that want an assured market for their crop and the local feed industry that states that it does not need as much sorghum as is produced in the country. However, the government ensures that the feed industry purchases the entire local crop by restricting or denying importers access to import licenses for other feed ingredients, such as corn or soybean meal until all domestically produced sorghum has been absorbed. This situation is complicated by the fact that crop statistics in Venezuela are either unavailable or unreliable, so it is difficult to determine when the entire sorghum crop has been purchased.
Wheat
According to the U.S. Agricultural Attache, wheat production in Venezuela is negligible. The little wheat produced in the Venezuelan Andean region is milled and consumed close to where it is harvested. The lack of “temperate” climatic conditions and suitable land for planting the crop are the main reasons for limited production. Though it produces virtually no wheat, Venezuelans consume large quantities of bread, crackers, pastries and pasta. Despite the current economic recession in Venezuela, wheat consumption has remained strong since pasta and bread are low-cost basic staples of the Venezuelan diet and constitutes much of the diet of poorer Venezuelans. The consumption of pasta has grown in the past 5 years, as low-income households began to substitute it for meat in their diet due to falling disposable incomes. Per capita consumption of pasta is the second highest in the world behind Italy at 14 kg per year. Currently, wheat consumption in Venezuela is second only to corn, and at 47 kg per capita per year amounts to 37 percent of total national grain consumption. Venezuela imports virtually all of its wheat requirements, and at an estimated 1.6 million tons in 2005/06 wheat makes up 70 percent of all grain imports. Venezuela ranked 16th in total wheat imports in 2004/05, with the world’s top-5 importers being Egypt (7.7 million tons), China (7.0), Japan (5.7), Brazil (5.0), and Algeria (4.5).
Wheat consumption in Venezuela is forecast to remain strong as long as household budgets are constrained, and under current economic circumstances it is unlikely that consumption of anything but the cheapest sources of calories will increase. Venezuela regularly imports over 50 percent of its annual grain consumption requirement. Grain imports in 2005/06 are forecast to total 2.3 million tons, with wheat, corn, and rice accounting for 70, 28, and 2 percent respectively.
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