Trade Barriers Stymie Venezuelan Corn Imports
Between 1996 and 2000, Venezuela imported an average of one million tons of U.S. corn annually making it one of the U.S.s top ten markets. The imports are needed to meet the demand of the growing pork and poultry industries. Venezuela produces about 1.2 million tons of corn annually, but most of it is white corn destined for human consumption. After a record crop in 2000 left producers with a surplus of 150,000 tons, the pork and poultry industry reached an agreement with the government to purchase the surplus at a large premium to imported corn with the understanding that it would be reimbursed for much of the extra cost. Following another bumper harvest in 2001, farmers were left with a 400,000-ton surplus because the industry refused to pay the "target" price, $235/ton, since it had yet to be reimbursed from the previous year. Last September, frustrated by the industrys refusal to buy the local production, the government published a statement saying that it would not issue any corn import licenses until the domestic crop was completely sold. The pork and poultry producers responded by drawing down frozen meat stocks and reducing corn consumption by using non-grain feed ingredients, which are not subject to the import-licensing requirement. Now eight months into the import ban, the industry has just about absorbed the domestic corn surplus. If Venezuela lifts the ban, purchases of lower priced imports should surge in an attempt to build up stocks before the domestic crop is ready this summer. However, because of the interruption in trade, USDA estimates that Venezuela will import 900,000 tons this year, down 300,000 tons from last year.
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