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- Caracas has increasingly relied on the private sector in a bid to revamp production in formerly nationalized countryside companies.
By Ricardo Vaz
CARACAS, (venezuelanalysis.com) – The Venezuelan government is partnering with Turkish enterprises in an effort to reactivate state-owned sugar cane processing plants, agriculture minister Julio León Heredia announced Thursday.
In a social media post, León said that Caracas was “consolidating a strategic alliance” with national and Turkish investors to boost the country’s productive capacity.
According to the minister, the agreement involves the Central Venezuela mill in Zulia state, which is reportedly set to restart operations in September. The Santa Clara mill, in Yaracuy state, and the Ezequiel Zamora Agroindustrial Sugar Complex, in Barinas state, are the other assets that will be turned over to new private sector management.
The Zulia sugar mill was nationalized by the Hugo Chávez government in 2010 after workers denounced that its owners had paralyzed production. It was founded in 1913 and has the capacity to process 820,000 tons of sugar cane per year. Production increased after the state takeover before dwindling in recent years amid the country’s economic downturn following US sanctions.
The Santa Clara plant was founded by the Venezuelan state in 1972 before being privatized in the 1990s. It was taken over by the Venezuelan government in 2010 but operations reduced over time before a complete paralysis in 2020.
The Ezequiel Zamora complex in Barinas state was a major initiative under the former Hugo Chávez government. The project was designed to process 240,000 yearly tons of sugar cane but was never fully completed. It ran at around 15 percent of its capacity in 2015 and has gone through several administrations. The complex also includes a thermoelectric plant, designed to use sugar cane residues as fuel, which likewise never operated beyond a fraction of its 50 Megawatt (MW) capacity.
In April, León and minister of industry Alex Saab announced an agreement with foreign businesses to invest US $158 million in three state-owned sugar mills. Reports at the time did not disclose the chosen plants.
Venezuelan authorities have not provided any information on the private sector partners nor on the specific agreements. Strategic alliances often work as concessions under a specified time frame that do not involve the transfer of shares.
León’s latest publication pledged that the investments would “create jobs and dynamize local economies.”
In recent years, the Nicolás Maduro government has often operated under an economic emergency decree that allows the executive to exonerate tax collection at its discretion. León did not specify if these new initiatives would benefit from this tax break.
Venezuela’s agriculture minister went on to announce the sowing of 30,000 hectares of sugar cane alongside Venezuelan campesinos and rural producers to supply the mills.
Countryside “strategic alliances”
With US-led economic sanctions heavily constraining the economy, the Venezuelan government has sought out new investment by offering favorable conditions to private businesses.
In the countryside, Caracas turned a number of state-owned assets over to local governorships, which were then charged with finding partners for “strategic alliances.” Nevertheless, the model has drawn criticism in the past for a lack of transparency, fraudulent practices and exploitation of small-scale producers.
In 2021, sugar-cane producing campesinos from Portuguesa state occupied the Santa Elena sugar mill to demand answers from the Venezuelan government. The local producers denounced that their harvests were at risk and that a local magnate chosen to manage the plant in a “strategic alliance” had run it to the ground.
The Portuguesa governorship later chose a different private partner and the plant has remained active.
In Cumanacoa, Sucre state, the governorship’s chosen partner defrauded local producers of an estimated $500,000 before abandoning the plant. Campesinos staged several mobilizations demanding accountability and that the debt be repaid, but only received a partial payment.
In response, the Cinco Fortalezas Commune in Cumanacoa has developed an artisanal sugar-cane processing facility (“trapiche”), producing papelón and other derived products that have been developed in alliances with other grassroots organizations.
Sugar cane producers have likewise denounced rising production costs in recent years, including insufficient access to subsidized diesel fuel that forces them to resort to the black market. They have additionally complained that imports, especially from Brazil, are used to drive harvest prices down.
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