No flour so no bread - what does Venezuela do? Arrest the bakers

The embattled administration of President Nicolas Maduro expropriated two bakeries as the Venezuelan government deepened its socialist economic policies.

There are more than 700 bakeries in Caracas. And the government said over the weekend that they should produce price-controlled bread (which bakers claim is a money-loser) “continually”. Of those, 436 have been visited by authorities since Monday. Twenty-six have already closed for business, the government admitted.

The two bakeries expropriated today -- “Mansion's Bakery” and “Rol 2025”, both located in the traditionally pro-Maduro Western side of Caracas -- were given to the “Local Committees of Supplies and Production”, or CLAPs, per their Spanish acronym, according to Sundde, the government’s consumer-rights watchdog agency. The committees are composed of militants in Maduro’s ruling PSUV party. The CLAPs will occupy the bakeries for atleast 90 days.

One of the reasons why machine gun-toting National Guards took over the bakeries was that the bread, according to the government, was light. “Each canilla (baguette) should weight 180 grams and these weight only 140”, Sundde head William Contreras said.

The CLAPs are working in tandem with a more shadowy organization tied to the Maduro administration, according to local media: the dreaded “colectivos”, pro-government biker gangs that show up at bakeries and demand to see the stock of flour and other raw materials used to make bread, in order, they say, to make sure the owners aren’t hoarding.

The government ordered panaderias to use 90% of their raw materials for the manufacturing of price-controlled bread. Bakeries that do not comply will be nationalized, Vice President Tareck El Aissami threatened on Sunday.

The government has a losing track record when it comes to taking over private businesses. Several “areperas” – inexpensive restaurants where the flat cornbread “arepas” used to be sold -- were nationalized back in 2012, when Maduro’s predecessor, Hugo Chavez, was still alive and President. The result was an unmitigated disaster and now arepas in the non-socialized restaurants are more expensive than ever, so much so that local investment bank BBO's banker Miguel Octavio has developed an (ever-soaring) “arepa” index, to compete with the renowned McDonald’s inflation index. As of last month, the Octavio Arepa Index is up 407% in a year.

Anti-corruption NGO “Transparencia Venezuela” says the Maduro government now owns 511 companies, either through expropriation, nationalization or by creating new concerns, and most of them lose money. Actually, the NGO says the losses are bigger than the budget for health care, education, law enforcement, housing and social security.

“Transparencia” estimates that 70% of the government’s companies lost Bs 1.29 trillion in 2016, based on balances published in the “Gaceta Oficial”, the official gazette, the government’s newspaper of record. That’s 14% higher than the Bs 1.13 trillion spent last year in the above mentioned items.

Even worse, about half of the money lost was transferred, directly, by the central government, “Transparencia” says. So, the companies are losing their own money and extra funds sent by the government.

The number of public employees in Venezuela has grown from 1 million in 1998 to more then 3 million nowadays. Venezuela has some 31 million inhabitants and the working-age population is of around 10 million.