After more than 50 years in Venezuela, Kellogg’s Food closed operations in the country last week. A note stuck on the door of the plant located in the city of Maracay, read that it has been forced to cease operations in the country, which further explained to its workers that its liquidation and all the commitments had been honored in the fortnight they charged. The measure took by surprise the 400 employees who awoke in the facilities where the iconic Corn Flakes cereal was made, and found the doors closed.
Kellogg’s, an American brand with a century of presence in almost the entire world, joins the hundreds of thousands of companies that have closed in Venezuela in recent years. The company had already reduced its production and some brands had already disappeared.
The deterioration of the economic and social situation in the country has forced the company to stop its operations and leave, “they explain in another statement in which they clarify that the distribution and commercialization of their products throughout the country is suspended.”
The managers of the company have not come to the company. However, government officials took the facilities of the cereal plant at noon on Tuesday. The situation of other multinationals such as the American Kimberly & Clark, a personal care products company that closed operations in the country in 2016, is repeated and its factory was confiscated by the government, which is now subject to another ICSID claim for this expropriation. The same happened with Clorox, intervened by the government of Nicolás Maduro in 2014 to keep the jobs, whose production has come in a tailspin.
Juan Torrealba, who worked on the line every day – if there were no power cuts or other inconvenience – produced 14 tons of Corn Flakes, he fears that the same thing will happen with it. “One would like to be optimistic, but with the experience that one has seen with other companies taken by the government is very difficult to be,” he said, still surprised by the action taken by the company.
In 15 years, close to 500,000 businesses have lowered the bars in the South American country. The last year has worsened the deep economic crisis due to the entry of hyperinflation and the inability to access foreign currency by the industrial sector. The constant wage increases he has decreed for the government have also led the sector to red figures, which make it unfeasible to pay for the increases. Since 2015, 3 million jobs have been lost due to the closure of companies or the reduction of their operations, according to data from Coindustria.
The contraction of the industry, particularly the food sector, which is around 70%, caused by the control of exchange and prices imposed by the government 15 years ago, has accentuated the scarcity of food in supermarkets, where People make lines to access, and in a limited way, the few products that arrive at the establishments. The Venezuelan government has almost 300 food companies, including state-owned companies, controls the entire chain of production, distribution and sale of these products and has not been able to stop shortages
Last week at the Annual Meeting of Fedeagro, the president of the Venezuelan Chamber of the Food Industry, Juvenal Arveláez, warned that the lack of currency settlement for the sector has compromised the relationship with international suppliers of raw material for processing food. “People are going hungry,” said the businessman.
Last month the representative of Fedeagro, Aquiles Hopkins, had also warned that the outlook for the country is obscure in terms of food security. This year, the Venezuelan field will only be able to produce 25% of the country’s demand, since they did not receive the inputs for sowing in time, whose sale is monopolized by the government, and in the black market they are excessively expensive for the national agricultural producers.