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The Beef Sector in Venezuela

 

            The crisis that Venezuela has faced during the passed years is now affecting different sectors in the market consumption, such as the beef sector, which is starting to be a big dilemma. The government set a very low price for beef this is because they are trying to minimize the money spent by the people. This price control on beef is affecting people in the beef business in an enormous way, leading them to take decisions that will not be the best for the rest of the population. The prices set by the government are so low that butchers have decided not to sell more beef, causing a shortage on it, as shown on fig. 1. The shortage is not only caused by the low prices, it is also because selling beef at the normal price will put them in the risk of being taken to jail.
             Fig.2, illustrates the graph of price elasticity demand of beef, which is inelastic. In the graph can be seen that the price can change dramatically and still the quantity demanded will not change that much, this is because beef is a good of necessity, and no matter what people are going to consume beef. When the government set the price control, a lower price than before, then the demand of beef increased as shown in fig. 3, but this decision is affecting butchers because they are buying beef at $3.00 per kg, and have to sell it at $4.00 per kg so their income is really being affected. On the other hand people are being benefited; they can buy same amount, or even more, and spent less.
             The profit of the butchers is just $1.00 per kg so some of them started to sell at a higher price, but when the government realized it, they started to take action into this. If they caught someone selling at a different price of what they set the would hold them for several days and take advantage of their power by strip searching them and if they get convicted they could be in jail from two to six years. All of the things that the government is doing to the butchers were scaring them; they do not want to sell beef.


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