Agriculture Guilds and Buyers in Venezuela Loan Supplies to Farmers to Increase Rice and Corn Production

More than 300 hectares of verdant corn and rice planted by farmer Roberto Latini are set to be harvested in September. Latini could only plant the crops because he received funding for fertilizers from an agriculture guild which has stepped in to front funding for farmers in the economically beleaguered Venezuela.

Thanks to loans of fertilizers and seeds from buyers, Venezuelan growers of rice and corn have reversed a years-long slump in production. According to a dozen farmers, the loans free up funds to invest in generators and other efforts to fight utility cuts. The loans from at least six guilds in Portuguesa and 20 crop-buying groups nationally come amid tight credit restrictions which make traditional loans from banks nearly impossible to ink, and inflation of over 50%.

“One survives with the support of the guilds which offer the fertilizers,” said Latini.

For some small growers, the terms of the loans can still be prohibitive as it is often paid back with the harvest itself. Without more regular financing from banks, farmers say that challenges will persist and some producers could shut down operations.

Venezuela largely relies on national food output. In the last decade, agricultural production has plummeted after years of price and currency controls, land nationalizations, lack of fuel, and failures in public utilities. President Nicolas Maduro loosened currency restrictions in 2019, allowing transactions in dollars and giving the economy some breathing room. He has also employed an orthodox effort to reduce inflation with credit restrictions and lower spending.

“Forward selling” of crops is common in other Latin American countries like Brazil. But in Venezuela, the practice is new and growing. According to local consulting firm Globalscope, bank loans available to farmers in Venezuela total about USD 330 million. Much of the funding goes to producers of small-scale export crops like sesame and mung beans. According to government figures in Bolivia and Colombia, credit availability is between nine and 12 times that figure.

“There is no protection for the agriculture and ranching sector in finance,” said Gerardo Mendoza, head of local agricultural consultancy Agrotributos.

In 2023, the output of rice and white corn was up to 1.2 million metric tons, which was 29% more than in 2022. However, according to agriculture guild figures, that boost is still leagues below production of 3.4 million tons a decade ago.

Giorgio Ruffato, also a grower of rice and corn in Portuguesa, represents one association helping fund farmers. “We give them seeds, insecticides, help with machinery repairs and services to store their harvest,” Ruffato said at his farm, which includes a small laboratory where he checks for crop damage from pests or fungi.

Producers pay back loans by handing over their harvest or with their earnings from selling to processing plants, who pay them for crops in dollars based on international prices. However, some small producers still do not earn enough to pay back the guilds.

“Many small producers will disappear, some of us are in debt (to associations or companies),” said Cesar Tovar who sold some machinery to cover his costs.

Higher costs for producers, coupled with 12-month inflation of 51.3%, could trickle down to consumers. “Any different form of credit is onerous. If you add (public) services and taxes, all that can have an impact on prices,” said economist Hermes Perez.

Because of poor infrastructure and frequent cuts to water and electricity, some farmers are making large investments in roads and backup power sources. “We have had to take up solar panels which charge batteries,” said Luis Hernandez, a grower in the state of Apure, who has trouble getting fuel.

As for Latini, he uses transformers on his land to keep watering for rice plants working even with power cuts. Meanwhile, Ruffato has repaired some local roads to be able to transport crops.