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Venezuela–No Farms, No Food

June 24, 2016

0,,19291262_303,00We have all heard the news from Venezuela that the falling price of oil has led to a food shortage. One headline reads “Venezuelan economic crisis leads to food shortage”.
However, I would disagree. Food grows in my garden no matter what the price of oil is.
Years ago, Venezuela, under Hugo Chavez, imposed price controls on food. Neither the farmer nor the market could decide the price of the product, making it unprofitable to grow crops and to feed animals. The farmers hung up their plows and headed to the oil fields where they could earn a decent living. At that point the entire country became dependent on neighboring countries to supply the food, and as long as they were flush with cash, they could make this socially engineered pricing scheme work.
The problem is not just an oil price problem, it is a food production problem. For anyone to be secure, individual or country, they must be food secure.
I am old enough to remember the wage price controls that Richard Nixon imposed in the 1970’s. Ranchers stopped shipping their cattle to the market, and the grocery stores had empty shelves.
Food shortages in the present day United States are unlikely. We produce an abundance of food. However that food is produced in a few localized agricultural regions and is distributed, by trucks, throughout the country.
During Hurricane Ike every grocery store in Houston was mostly empty hours before the storm hit. When Hurricane Rita was forecast to hit Houston, an evacuation stalled in my little town of Hempstead, among others. The traffic jam was so bad that cars ran out gas while idling on the highway. Our grocery stores were totally out of food and water before dark, for a hurricane that was supposed to hit the next day. The hurricane moved east and missed Houston. The trucks came in and resupplied the shelves after each incident.
But what would happen if the trucks could not get back in? We had an example of that after Hurricane Katrina. Food shortages continued for days.
One of the reasons we do not grow more food in the cities of Texas is the state tax policy. Texas has one of the highest property taxes in the nation. Farmers need land. Land is taxed at a high rate. To counter the disincentive this generates, we have a method of adjusting the tax on agricultural land. Currently, county tax assessors require you have at least five acres, which is impossible to come by inside most urban areas. There is a five year waiting period, and usually vegetables and fruit are not considered agriculture, though hay is. This type of government interference in the market keeps urban and small local farmers from providing the food an urban population needs.
Unlike Venezuela, we are not at the mercy of the price of oil to eat, but we are at the mercy of trucks. When trucks quit moving, 5.5 million people in the greater Houston area could be dependent on a few hundred acres of local food. We need to incentivize farming in small tracts to attract more and younger farmers. To get that, we need property tax reform for farmers.
What Chavez did through price controls, America does through taxes and regulations.

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