Venezuelan Consumers Count on Pulse Imports

U.S. pulse suppliers wanting to sell in the Venezuelan marketplace face stiff price competition from this country's South American trading partners. But one factor makes the Venezuelan pulse market very appealing--despite several abrupt shifts in the economy during the past 10 years, pulse consumption has remained a stable aspect of the country's economic landscape.

Consider that, because of the country's recession, sales of less essential grocery items have fallen by 30 to 40 percent during the past five years. Yet per capita consumption of pulses still averages about 6 kilograms a year.

In 1996, pulse imports totaled 80,000 metric tons, while domestic production was only 35,000 tons. It seems that Venezuelan farmers don't find pulses as profitable as other crops, and they have difficulty competing with cheaper imports. These two circumstances will likely prevent any increase in domestic crops.

Beans represent two-thirds of all pulse imports. Black beans, an important ingredient in many of Venezuela's traditional dishes, corner more than 80 percent of the bean portion. Whole and split dry peas (yellow and green) hold a distant second in the pulse import market with a 19-percent share. Lentil and chickpeas make up most of the remainder with 11 percent and 3 percent, respectively.

A few Latin American countries dominate the Venezuelan market for beans and chickpeas. Due to trade agreements, Argentina, Chile and Colombia enjoy preferential tariffs that enable them to offer the lowest prices in several categories. Canada controls the lentil and dry pea categories.

The following chart provides the pulse tariff rates for countries that export to Venezuela:

Tariff Rate (%)	Country
0	Andean Pact countries (Colombia, Ecuador), Chile and Peru
1.5	Paraguay
5.25	Argentina (preference applies only for first 10,000 metric tons)
13.2	Mexico
15	United States, Canada and others

While price is the main deciding factor among foreign suppliers, Venezuelan consumers also expect good value for their money. Several importers report that the United States has lost market share in dry peas and lentils because of quality problems.

There is a small selection of domestic and imported canned beans and chickpeas on the market; however, the relatively high prices of canned foods put them out of reach of most consumers.

Bulk dried pulse imports are exempt from taxes. Canned pulses, however, are burdened with a wholesale and luxury consumption tax. The importer pays this 16.5-percent tax, which is assessed on the c.i.f. (cost, insurance, freight) price, plus any other importation costs.

Many importers also wear the hats of wholesalers, packers and distributors. Although a government resolution in 1989 set a maximum margin of 10 percent between packaged and bulk pulse prices, market surveys reveal that retail margins on repackaged pulses are closer to 100 percent.

Several years ago, major supermarket chains such as Cativen and Central Madeirense and the Makro hypermarket group introduced their own pulse labels. Trade sources believe Makro and Cativen have begun sourcing directly and contracting for domestic repackaging.

Given the large markup that middlemen claim, U.S. exporters, who previously lost market share or were denied entry into this market, might want to steer toward supermarket and hypermarket chains that import directly.

Imports are usually shipped in 12-kilogram sacks, then repackaged domestically. Over 60 percent of pulses are retailed in 500-gram clear plastic bags. However, bulk sales are common in public markets and smaller grocery stores.

Label information on pulses must include the generic name, packaging date, batch number, net content in metric units and the name and address of the importer, packer or distributor. If applicable, an expiration date is also required.

Label information must appear in Spanish, but bilingual labels are allowed. Labels must also have a trademark registration number issued by the Ministry of Health and Social Assistance. Most labels include a recommended retail price.

Bulk imports of pulses require phytosanitary permits issued by the country of origin and by the Venezuelan Ministry of Agriculture. Imports of packaged and canned pulses require an official health certificate from the country of origin and must be registered as an imported product with the Venezuelan Ministry of Health and Social Assistance.,

The Venezuelan Industrial Norms Committee (COVENIN) sets general microbiological standards for foods in COVENIN Norm #0409-84.

Comprehensive sampling and labeling regulations are included in COVENIN Norms #1338-86 and #2952-92. More specific information can be obtained from COVENIN by mail or fax:

The author prepared this report for the FAS Office of Agricultural Affairs in Caracas, Venezuela. Tel.: (011-58-2) 977-0015; Fax: (011-58-2) 088-1689; E-mail: Ag_Caracas@fas.usda.gov.