The economic deterioration Venezuela is currently facing is driving changes in agricultural production, adjustments to consumption patterns, and unprecedented demographic shifts. The Maduro government now finds itself unable to import fuel, purchase basic commodities, or maintain long-standing social programs at existing levels. Unless the Venezuelan government undertakes massive economic and political reforms, production and consumption of traditional grain crops will drop further.

Venezuela is located on the northern coast of South America. The country comprises a continental mainland and numerous islands in the Caribbean Sea. It is the 33rd largest country in the world. It is bordered by Brazil, Colombia and Guyana. The country covers an area of around 916 thousand square kilometers and has a population of around 28 million. Around four million people live in the capital, Caracas. Venezuela is known widely for its petroleum industry, the environmental diversity of its territory, and its natural features.

Venezuela is a major oil producer, and its economy has been highly dependent on the petroleum sector. Its oil revenues account for about 99 percent of export earnings. Apart from petroleum, the country’s natural resources include natural gas, iron ore, gold, bauxite, diamonds and other minerals. Venezuela is experiencing the worst economic depression in the country’s history. Without comprehensive economic reforms, there are few prospects of a recovery in the short term.

Agriculture in Venezuela accounts for approximately 3% of GDP, 10% of the labor force, and at least a quarter of Venezuela's land area. The country is not self-sufficient in most areas of agriculture. The economic deterioration Venezuela is currently facing is driving changes in agricultural production, adjustments to consumption patterns, and unprecedented demographic shifts. At the same time, the geopolitical environment is creating a situation where new trading partners are replacing traditional suppliers.

The Venezuelan state has long depended on oil revenues to sustain government spending. As U.S. sanctions limited potential buyers for Venezuelan oil, the Maduro government was forced to sell oil at an increasing discount, further eroding revenue. The more recent oil price war between Saudi Arabia and Russia has greatly exacerbated the situation and pushed Venezuelan crude to untenably low prices. The Maduro government now finds itself unable to import fuel, purchase basic commodities, or maintain long-standing social programs at existing levels.

UNMANAGEABLE INPUT SHORTAGES Venezuelan farmers are no stranger to shortages. In recent years, shortages of certified seeds and fertilizer have been common. But in 2020, contacts report that fuel and input shortages are unmanageable. Producers are decreasing planted area across many traditional row crops because there is no fuel to run tractors. In making planting decisions, some farmers are selecting more productive acres for cultivation, which could increase yields per hectare if the gains are not offset by shortages of seed and fertilizer. Farmers are choosing to plant higher-value crops when able; for example, white corn for human consumption is now favored over yellow corn for feed. Additionally, many are planting staple pulses and tubers on unused acreage previously dedicated to grains.

CHANGING CONSUMPTION PATTERNS Venezuelan consumption patterns are continuing to change. People are eating noticeably fewer corn and wheat products. Consumption of animal proteins has also dropped markedly, from an average of 5.93 kilograms per month from 1999-2014 to 0.795 kilograms per month in 2019. This consumption change illustrates the stark decreases in grain consumption for animal feed producers. The Venezuelan population is declining as limited access to food drives many Venezuelans to migrate to neighboring countries.

Amid this crisis, trading patterns are evolving. Venezuelans walk across the border to shop for cheaper rice in neighboring Colombia. Russia, Turkey, and China have all emerged as important suppliers of commodities and processed food products to Venezuela.

Unless the Venezuelan government undertakes massive economic and political reforms, production and consumption of traditional grain and feed crops will drop again in MY 2020/21. Some of the decrease may be offset by increased imports, depending on private sector’s continued ability to import and the Maduro government’s fiscal constraints.

During the market year 2020/21, a decrease in production is forecast across most commodities in Venezuela. Farmers are dealing with acute shortages of agricultural inputs such as seeds, fuel and fertilizers. With dwindling production and limited imports, USDA forecasts declining grain availability to further squeeze the diet of Venezuelan consumers.

NEAR ZERO WHEAT PRODUCTION Venezuela is almost entirely dependent on imported wheat for domestic consumption. There may be a few thousand hectares of experimental wheat grown in the country. The Venezuelan Millers Association indicates that the domestic wheat supply has a very marginal impact on the market. Furthermore, the dearth of agricultural inputs in the current year will further challenge any domestic production. Without broad political and economic reform to allow for the import of inputs, production in the forecast year will be near zero.

In MY 2020/21, USDA’s Caracas post expects continued declines in wheat consumption, reaching only 775,000 metric tons. The decrease is explained by a shrinking population, deteriorating government revenues, and continued high inflation. Consumption in MY 2019/20 is expected to only reach 780,000 metric tons.

With the global economic downturn associated with the novel coronavirus and the ongoing oil price wars, government revenue for public sector purchases will be limited in the coming year. Additionally, total consumption will drop as refugees continue to flee the country. UN estimates put the 2020 Venezuelan population at 28.4 million, the lowest level in a decade. Some of the decreases in Venezuelan consumption will likely reappear as increased consumption in neighboring Colombia, Peru, and Ecuador.

Since Venezuelan per capita consumption of wheat peaked in 2014, it has been on a steadily decline. In 2014, the post estimates that Venezuelans consumed 61.6 kilograms of wheat per year. Per capita consumption currently stands at 28.9 kilograms per year, as high inflation eroded purchasing power and dwindling government revenues limited public-sector imports.

USDA Caracas post estimates that Venezuela will import 775,000 metric tons of wheat in MY 2020/21. The post also decreases MY 2019/20 wheat imports 22 percent to 780,000 metric tons. The decrease is based on slower than expected shipments in the current year. In September 2019, Russia signed an agreement with the Maduro administration to supply 600,000 metric tons of wheat to Venezuela over the next year. The media reported that this agreement was an increase over the 254,000 tons supplied in 2018. As of March 2020, only 99,000 tons of Russian wheat had arrived at the port in Venezuela since the agreement was signed. Contacts indicate that private millers have rejected the opportunity to purchase Russian wheat from the Maduro government due to concerns with quality.

DROP IN RICE PRODUCTION Post forecasts harvested rice area in MY 2020/21 to drop to 55,000 hectares on resource limitations. With the decreased area, FAS Caracas estimates that production will reach only 105 MT. A severe lack of fuel, seeds, fertilizers, and access to credit is limiting the amount of land that farmers can put into rice cultivation. Marginal lands are being excluded from grain production, some of which will be moved to low-cost staples such as tubers and legumes. Low oil prices and resource strain from the ongoing COVID-19 outbreak are expected to exacerbate the drops in production in the forecast year.

In MY 2020/21, the post forecasts that consumption will drop 10,000 metric tons to 590,000 tons. The marginal drops reflect continued emigration and low per capita consumption. NGOs operating in Venezuela estimate per capita rice consumption between 20 and 23 kilograms per person per year.

In MY 2020/21, post forecasts Venezuela import 450,000 metric tons of rice. The opening of imports to the private sector discussed above has allowed rice imports to remain mostly stable. There is some cross-border trade with Colombia, which is mostly unreported and may account for as much as 50,000 MT of rice imports. Post estimates that MY 2019/20 rice imports will reach 460,000 metric tons based on actual port arrivals to date and additional volumes arriving by land from Colombia.

CORN Post forecasts further decrease in Venezuelan corn production in MY 2020/21. Area planted is expected to fall an additional 33 percent to 100,000 hectares, while yields drop modestly. With decreasing area, post estimates that total production will fall to 280 metric tons. The post is also decreasing MY 2019/20 production 10 percent to 450,000 metric tons on fuel shortages expected to negatively impact harvest.

Forecasts for MY 2020/21 illustrate drops in consumption consistent with decreases in production. Post forecasts total consumption in MY 2020/21 to reach 800,000 metric tons, 300,000 metric tons. Post estimates that consumption in MY 2019/20 will only reach 950,000 metric tons, 150,000 tons below official estimates. The current year downward revisions are necessary as imports have not made up for anticipated production drops.

USDA post forecasts that total corn imports in MY 2020/2021 will fall to 440,000 metric tons. Private importers are currently limited by access to hard currency and cash flow, as many are unable to access credit for imports. The decrease assumes that the Maduro government will continue to allow the private sector to control imports. An increase in food-for-oil deals or similar future government arrangements could drive up imports. Almost all yellow corn is imported from the United States and white corn from Mexico. The post is decreasing MY 2019/20 imports 50,000 on actual shipments to date.

Source: USDA, Foreign Agricultural Service, Global Agricultural Information Network (GAIN) report