LAND GRAB: Farms Are Latest Target

Co-ops of City Dwellers
On Seized Acreage Are
Mostly a Bust So Far

By JOSÉ DE CÓRDOBA
May 17, 2007; Front page of the Wall Street Journal

SAN FELIPE, Venezuela -- Vicente Lecuna jabs a wall map of his Santa Isabel ranch so angrily that the map crashes to the floor. "I used to produce 10,000 tons of sugar cane a year," says the 67-year-old Venezuelan cattleman. "Now it's zero! Zero!" he shouts.

Two years ago, squatters seized about half of Mr. Lecuna's 3,000-acre ranch, setting up a cooperative named "Re-Founding the Fatherland." Far from being evicted, the squatters got loans and tractors from the government of President Hugo Chávez. They then uprooted the sugar cane and decided to try their hand at growing plantains.

"We are building socialism and fighting capitalism!" says co-op leader Juan Nava, standing amid wooden shacks on what used to be Mr. Lecuna's land. The rancher's efforts to fight the takeover in court have gone nowhere.

If the rhetoric smacks of the 1960s, it's because Mr. Chávez dreams of transforming Venezuela just as Fidel Castro did Cuba. Mr. Chávez has already sharply cut private companies' role in Venezuela's lucrative oil industry, and uses the state oil company to funnel billions of dollars to his social projects. He has nationalized the leading telephone company and the main electric utility. He speaks of wanting to drive a stake through the heart of capitalism, limiting the role of money and installing a barter system.

Now Mr. Chávez is taking his revolution to the Venezuelan countryside. "We must end latifundios," he said in a televised speech in March, referring to large agrarian estates. "The people order it, and we will do it, whatever the cost." Then he announced the seizure of a land area larger than the state of Rhode Island.

Since coming to power, the Chávez government has handed over 8.8 million acres, an area bigger than Maryland, for use by the poor. While much of this was state-owned land that was either idle or leased to ranchers, some 4.5 million acres were "recovered" from private owners, Mr. Chávez said recently. In some cases, the government compensated them. In most others, like Mr. Lecuna's, it has simply turned a blind eye to land invasions.

The government bills land reform as a way to make Venezuela self-sufficient in food. But so far, the effect has been to undercut production of beef, sugar and other foods, as productive land is handed to city dwellers with no knowledge of farming. Established farmers and ranchers, fearing their land may be seized next, are cutting investment in their operations to a minimum.

The chaos in the countryside has contributed to shortages in basic items like milk and meat, a paradox in a country enjoying an economic boom traceable to high oil prices. Also spurring the shortages are price controls on certain foods that keep them priced below the cost of production. Meanwhile, 19%-plus inflation -- as oil revenue floods the economy -- spurs panic buying: purchasing price-controlled and other goods the shopper might not immediately need for fear of having higher prices in the future or not finding the items at all.

"You get up at dawn to hunt for a breast of chicken all over town. Housewives are in a foul mood," says Lucylde González, a Caracas homemaker, who says she hasn't seen an egg in a week.

After squatters took part of Mr. Lecuna's land, his bank said he could no longer use what remained as collateral for loans, and asked him to put up a Caracas office building he owns instead. Mr. Lecuna says he can't get financing from state banks, because they now won't lend to farmers with more than 100 acres. He has stopped buying fertilizer and machinery. "I'm afraid of investing," he says. In addition, kidnappings of farmers and ranchers for ransom are on the rise, and scandals have plagued the co-op program.

Mr. Chávez blames the shortages on "speculation" by distributors and producers. Agriculture Minister Elias Jaua recently called a news conference to deny there's been any decline in food production during the eight years of Chávez rule. The central bank stopped publishing agricultural statistics in 2005. A private farm association called Fedeagro estimates Venezuela grew 8% less food last year than the year before, citing factors including the price controls, land seizures and the wave of kidnappings of farmers.

Oil-Fueled Experiments

Some Chávez initiatives recall disastrous past experiments with collectivized agriculture, such as in Mao's China and the Cuban revolution, which helped turn one of Latin America's richest lands into one of its poorest. But as the world's fifth biggest oil exporter, Venezuela has an advantage they didn't. Oil revenue gives the fiery nationalist leeway to pursue utopian policies despite the doubts of many mainstream economists that they are sustainable.

Members of new farm co-ops receive training via a program called Misión Vuelvan Caras, ("Mission About-Face"), which Mr. Chávez has just renamed Misión Che Guevara. It pays thousands of slum dwellers monthly stipends to learn a hodgepodge of Marxism, "ancestral" Venezuelan farming methods, and Cuban fertilizer-making techniques. In two years, the program has graduated nearly a million people.

At the Re-Founding the Fatherland co-op, the 96 members have four tractors, including a bright red Veniran made by a Venezuelan-Iranian government joint venture. Co-op members have uprooted about 540 acres of sugar cane planted by the former owner, Mr. Lecuna. The co-op's Mr. Nava, a wiry former construction worker in plastic sandals, says members have planted 60 acres of plantains, a figure he ups later in the interview to 170. Lecuna ranch hands say it's 10 acres at most. Co-op members have also planted small plots of corn, beans and watermelons.

The co-op's production doesn't come close to sustaining its members, and most work in nearby cities and towns. The dozen or so who live in shacks on the land are currently building a concrete trough that they plan to fill with millions of worms. The worms will be fed cow manure to create a fertilizer called humus de lombrices, or worm humus. The technique comes recommended by Cuba. "By next year, we will live from this," says Mr. Nava, as two rail-thin dogs fight nearby and kick up a cloud of dust.

Referring to the rancher whose land was seized, Mr. Nava demands, "Why so much land owned by one man and so many others dying for land? Tell Lecuna we are going to take everything. We are coming his way!"

Until Mr. Chávez became president in 1999, land reform wasn't a big issue in Venezuela. A land-redistribution program in the early 1960s had ended a system of big estates with absentee owners and serf-like laborers, handing hundreds of thousands of acres over for the use of peasants, say Venezuelan agriculture experts.

Early on, Mr. Chávez pushed legislation permitting the government to seize land from large farms, but opposition from farmers, ranchers and the supreme court largely stopped his efforts. He tried again in 2005 and this time faced little resistance. Mr. Chávez by then controlled the courts as well as the Congress, where he had no opponents because opposition parties, thinking legislative elections rigged, had boycotted the polls.

One of the first battlegrounds over land reform was Hato Paraima ranch, on the scorching plains of Cojedes state in central Venezuela. In 2005 the state governor, a Chávez ally, announced he would seize the 120,000-acre ranch outright from its owners, the Branger family. The federal government stepped in and, after months of negotiation, purchased about 80,000 acres. "It was a reasonable negotiation -- within the context that it was a forced negotiation," says Jaime Pérez Branger, president of the family company.

Hato Paraima's land gets virtually no rain about six months of the year. During the other six, it is subject to repeated flooding. So it's acceptable for grazing cattle and growing grass seed, but not much else. Even grazing is difficult because of the acidic soil and extreme rainfall pattern. The Branger family has a seed company that developed hardy grasses adapted to the tough conditions of Venezuela's plains.


Without any sort of water study, the government distributed 80,000 acres of Hato Paraima to dozens of co-ops and individuals -- who submitted plans for growing everything from sugar cane to vegetables on it, as well as for raising cattle on small plots. The government hoped the results would be a showcase.

But the co-op members have seen their pastures dry up in the searing sun of the dry season. Some gave up. Others, in desperation, have turned to the Branger family for help.

"The people are going crazy for lack of pasture," says Rodolfo Barrios, who manages the family's seed company, called Sembra. He says that co-op members pleaded with him five times this March for hay to feed their cattle, and that he donated about 1,000 bales, plus the use of a bulldozer to make a road to connect distant co-ops to the main road.

Today the co-ops feature a succession of empty shacks and a couple of skinny cows among dust devils and hard, rocky soil, with just a few people around. A planned community center is half-finished, as are some 25 houses that will eventually replace squatters' shacks. Roads and drainage systems promised by the government are, for most part, yet to be built.

Co-op member Arturo Morffe lives in a shack made of tin and sticks, with no water or electricity. The 50-year-old former construction worker is the only member of a 20-person co-op, all city dwellers, who lives full time at the co-op's 750 acres. He says the rest, including his wife and children, are back in the city of Maracay, where they first formed the co-op, and eight have abandoned the co-op effort altogether.

His wife visits occasionally, he says, as he takes a break from clearing brush with a machete. "She says I should quit the struggle." But the lanky Mr. Morffe, who has planted 100 maracuyá fruit plants by his shack, is determined to see the project through. "It's tough, but we have to keep going," he says. Pointing with his machete toward the stony ground, he says, "If the government helps out as it says it will, then in two years we could have 200 to 300 milk cows."

Taking Advantage

For some, the Venezuelan co-op program -- which readily makes loans available to members of a wide variety of co-ops, not just agrarian -- is evidently just a way to make a buck. Some city residents hire watchmen to live a subsistence existence in shacks on their rural homesteads while waiting for government loans. In Guárico state, officials say some local businessmen gave local prostitutes a few hundred dollars for the use of their names to form ghost co-ops and then receive loans of up to $100,000.

The repayment rate on farm co-op loans in Venezuela is less than 1%, says Olivier Delahaye, an expert on agrarian reform in Latin America. The whole Venezuelan co-op program is a "loan factory," Mr. Delahaye says.

José López occupies a tin and wood shack down one dusty road on a co-op. "I'm the watchman here," says the one-eyed Mr. López, sprawled on a hammock surrounded by empty beer bottles. Mr. López says the 40-acre homestead belongs to a person who works for a television cable company in the city of Valencia, three hours away, who drops by once a week to pay his salary.

An official from the government land institute, which certifies that the land's occupiers are making improvements, stops by, making his rounds. The official says the government has granted the homesteader a $40,000 loan to build fences and improve the place, although there is no water nearby.

Many involved in the land-reform effort say it is riddled with corruption, such as in San Carlos, the capital of the state of Cojedes, a sweltering town with a statue of a giant mango marking its entrance. The last three local administrators of the agency that grants squatters "agrarian letters" -- the first step in getting a government loan -- have been fired amid charges of mismanagement and fraud. "The struggle against the oligarchy is paralyzed," says Anibal López, an aging former guerrilla sent from Caracas to run the agency.

Scandals have dogged almost every agency involved with Venezuela's new agricultural development. Fondafa, which is supposed to fund the new co-ops, has the worst reputation. Reinaldo Barrios, a Chávez supporter and municipal official in the town of Zaraza in the main corn-producing region, estimates that $100 million of money intended for farmers was stolen or lost in the last two years.

"Impunity, inefficiency and corruption are destroying the economic and political bases of the country," he charges. Venezuela's Congress is doing an investigation. But some high-ranking Chavistas have labeled Mr. Barrios a "counterrevolutionary," suggesting the inquiry may not go very deep.

Mr. Chávez is undaunted. In late March, he held his weekly televised address from a farm that had just been seized. He asked an aide what kind of land it was. "This is a very flood-prone zone," the aide replied, saying that 80% of the land is at times under water. That didn't stop Mr. Chávez, who promised that in three months the government would have an economic development plan for the land. "The Revolution is here," he said.