Why Price Controls Don't Work - Shortages of Venezuelan Coffee

[Toro]

If you put a cap on the price of something, and the cost of producing that something continues to rise, then people stop producing it and it leads to shortages.

It is a very simple concept that people seem to fail to understand time and again.

The most recent example is that first the first time ever, coffee in Venezuela - formerly one of the biggest producers of coffee in the world and where arguably the best Arabica beans were grown - is going to have to import coffee from abroad.

Caracas, July 22 - Venezuela, a traditional coffee exporter that boasts one of the best cups of java in South America, may have to import coffee for the first time ever this year or face shortages, industry experts said.

Producers say rising costs and prices fixed by the government have caused production to fall and illegal exports to rise. The government says poor climate and speculation by growers and roasters is to blame.

"There is a serious shortage," Pedro Vicente Perez, coffee director with the national agricultural federation, Fedeagro, told Reuters.

"This is the first time ever Venezuela will have to import large quantities of coffee," Perez said.

Most estimates of how much Venezuela needs to import hover around 300,000 45-kg bags, to ensure supply until the 2009/2010 harvest begins in October. Experts say Brazil would be a likely supplier.

"We're talking about two months of supply," Nelson Moreno, head of the small and medium-sized roasters, told Reuters.

"Stocks, including reserves, will be entirely depleted by the third week of August," Moreno said. ...

On-and-off food shortages for years have dogged the government of President Hugo Chavez, a former paratrooper who has nationalized several industries and expropriated land as part of his socialist revolution.

Critics point the finger at price and foreign exchange controls that have slowed investments in expansion and maintenance and eroded productivity. The government blames shortages on speculation by the private sector.

A shortage of milk and beef contributed to Chavez losing a referendum in 2007 that would have granted him vast new powers.

Last week, Agriculture and Land Minister Elias Jaua said that the shortage of coffee, rice and sugar was due to climatic reasons. Imported sugar would reach the domestic market in coming days and the government will announce a host of measures to ensure the coffee supply, he said.

Venezuela to Import Coffee 1st Time Ever - Food Industry News

 

[Oddball]

Someone better share this one with the imbeciles in congress, who think that they can control the price of medical services.

 

[Kevin_Kennedy]

This is why we should be moving towards a freer market rather than towards a command economy.

 

[BaronVonBigmeat]

Incidentally, the opposite of a price ceiling (maximum price) is a price floor (minimum price). Whereas a price ceiling yields shortages, a price floor yields gluts. For example, a minimum wage yields a glut of labor, ie unemployment. The higher it is above market rates, the more unemployment you get.

 

[Big Black Dog]

The most recent example is that first the first time ever, coffee in Venezuela - formerly one of the biggest producers of coffee in the world and where arguably the best Arabica beans were grown - is going to have to import coffee from abroad.

I'm telling you now and I'm telling you very loudly. If anybody does anything to prevent me from getting a cup of coffee when I wake up in the mornings there is going to be some pure hell to pay around here... Take this as a warning!

 

[editec]

I agree.

Price controls inevitably end in disaster.

They cause shortages of whatever they seek to control.

 

[Paulie]

I'm telling you now and I'm telling you very loudly. If anybody does anything to prevent me from getting a cup of coffee when I wake up in the mornings there is going to be some pure hell to pay around here... Take this as a warning!

Unless of course it's the wife though, right?

The wife: "Ah ah ah, nuh uh, HELL to tha no, you ain't gettin' outta bed for no mutha fuckin' coffee! You rubbin' my feet!"

The dog: "you're right, honey."

 

[Big Black Dog]

Unless of course it's the wife though, right?

The wife: "Ah ah ah, nuh uh, HELL to tha no, you ain't gettin' outta bed for no mutha fuckin' coffee! You rubbin' my feet!"

The dog: "you're right, honey."

Jesus Christ. Admit that you're PW and it seems like you never hear the end of it.... What a mistake that was.