According to Bloomberg, nearly every economic metric shows Venezuela’s economy is improving. For instance, the country’s gross domestic product is now growing anywhere between 1.5% and 20%, depending on which economist is doing the forecasting.
In January, Venezuela’s hyperinflation, which had been running at a near 2- million-percent annual clip, ended, and some of the estimated 6 million people who had left the country for better opportunities are now returning to their homeland. While this bodes well for dairy consumption, the country will have to stage a steep recovery before it returns to its latest economic peak.
“Venezuela provides a cautionary tale in Latin America, and beyond, for how economic malaise can undermine a country’s dairy industry,” said Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra, an agricultural consulting firm in Buenos Aries.
“Historically, Venezuela has been a key dairy importer within South America, with dairy imports exceeding $1.3 billion at their peak in 2012,” Ganley said. “But sweeping economic pressures and dwindling foreign reserves undermined imports until they collapsed in 2020 to just $65.5 million.”
By 2021, Venezuela’s dairy imports had improved to $107.4 million, bolstered by shipments from Brazil, another net importer within the region. Last year, Brazil’s weak currency created a window for the country to expand dairy exports. This year, USDA expects Venezuela’s dairy imports to hold steady.
“Venezuela’s macroeconomic challenges have had devastating consequences for consumers, but things have started to improve. For instance, dairy consumption has increased after bottoming in 2018,” Ganley said.
Per capita dairy consumption in Venezuela rose to an estimated 60 liters per capita in 2021. However, this was still only about half of the 115 liters per capita Venezuelans consumed in 2008 and only about 20% of what Americans consume on an annual basis.
“Venezuelan milk production appears to have stabilized after falling dramatically but it will likely remain well below historical levels as producers in the country grapple with crumbling infrastructure, fuel shortages, and economic turmoil,” Ganely said.
According to a recent Global Agricultural Information Network (GAIN) report, USDA estimated that Venezuela’s output rose 2% to 1.52 billion liters in 2021, compared to the prior year. USDA also expected higher milk prices to spur a similar increase this year, with estimated output to reach 1.55 billion liters.
The country’s ongoing economic and infrastructure problems have also affected its dairy processors, Ganley noted. Currently, Venezuelan dairy processors are only using 20% of their installed capacity.
