December 11, 2007

Venezuela removes milk price controls as frustration builds over shortages 
 

Venezuela lifted price controls Monday on one type of milk as its citizens became more frustrated over price controls that have caused basic products like milk and chicken to disappear off store shelves.

Venezuela eliminated price controls on ultra-heat treatment, or UHT, milk, which is popular in Venezuela.

Price caps imposed by leftist President Hugo Chavez in 2003 have caused businesses to sell products at a loss and have led to chronic food shortages in the country, despite soaring oil revenues.

Amid the shortage, black markets have flourished, with basic products such as milk powder fetching double the official price.

That shortage was believed to have led to the frustration which cost the President his referendum recently, which saw huge abstentions from the population.  The referendum would have allowed him to run indefinitely for re-election.

While the government blames shortages on hoarding by businesses and rising food demand, market watchers say price controls have forced businesses to sell products at a loss.