Agriculture comprises only three percent of Venezuela’s GDP and the country imports nearly eighty percent of its food requirements today, but private industry and government leaders alike see the potential for the country to come much closer to attaining agricultural self-sufficiency.

Article 305 of the 1999 National Constitution places great emphasis on a national program for domestic agricultural and livestock production, and states that the government will put in place the commercial and financial measures needed to make self-sufficiency a reality. Many private agribusiness leaders welcome such a plan to development the industry.

The government has sought to generate employment in the sector and revive agriculture by assisting small farmers and by re-energizing agricultural production chains to encourage competition and sustainable growth. Venezuela’s Ministry of Production and Commerce instituted an ‘Action Plan 2001’ to help speed up development of the sector.

Action Plan 2001 calls for government action to help find secure markets for staple crops such as white and yellow corn, in which Venezuela is heavily import-dependent but has the potential to be more competitive.

The plan aims to stimulate greater demand for the country’s 1,300 rice producers, who have seen exports drop considerably from 58,000 metric tons in 2000 to 43,000 metric tons in 2001. Another government priority is national coffee production, and the promotion of finer strands of Venezuelan cocoa as an elite product to be sold on the international market.

Notwithstanding these ideas, the fate of the sector hinges in part on how the government plans to implement the new Land and Agrarian Development Law, hastily decreed by President Chavez in November 2001. Deliberately crafted outside of any public-private sector consultation process, the law allows the government to turn over unused land to small farmers, and gives discretion to the National Land Institute to determine whether private property or an extension of land is being properly utilized.

Critics believe that several features of the Land Law violate property rights consecrated in the Bolivarian Constitution of 1999 and other laws and articles enacted under the current administration. One such right is a definitive tribunal sentence and corresponding compensation, when the government proceeds with the expropriation of private land.

"We fear the Land Law establishes mechanisms through which a government-dependent institution such as the National Land Institute determines that a property or land is not being properly exploited, and gives the owner just eight days to prove the legitimacy of the property simply because the institute believes this land is not legitimate or is the property of the nation," said former Venezuelan-American Chamber of Commerce and Industry (VENAMCHAM) President Pedro Palma. "This obviously goes against the interests invested in those properties, which while still occupied, received a lot of improvements to make them productive."

The law has created enormous legal uncertainties that will likely deter new investment in the industry. Private industry leaders share the government’s goals to boost employment and land productivity, but they question the reliability of the government’s commitment and plan for achieving these objectives.

"There is a lot of land in Venezuela that is not being used, much of it owned by the government. There is simply not a culture here in Venezuela to use the land very efficiently," remarked Bent Porsborg, President of Plumrose, a leading Venezuelan beef processing company. "The government’s idea to give land to poor people and very small farmers is simplistic and problematic. To be a farmer today it takes a lot of money, you have to invest great amounts in machinery, and you need to be competitive," he said.

Palma contends the government’s ideas to establish small-scale agricultural system in Venezuela are highly inefficient and will bring about a series of negative consequences of unthinkable magnitude. "The biggest victim will be the consumer, who sees himself affected by the lack of production possibilities of agricultural and cattle products, and all of us will be far from the goal of alimentary security," he warned.