Humanitarian crisis leads to reliance on illegal market in Venezuela

Protest over long lines to buy basic goods during economic crisis in Caracas, Venezuela. (Credit: Carlos Díaz/Flickr)

Venezuela is reeling from nationwide shortages of power, water and medicine, the latter which led President Nicolas Maduro to declare a humanitarian crisis in January. Now, as food becomes increasingly expensive and scarce, soldiers are stealing goats to feed themselves, and lines are growing ever longer out of scantily stocked stores across the country.

Underemployed and hungry, many Venezuelans have turned to using a form of arbitrage by waiting many hours in line to buy and resell price-controlled goods elsewhere at a higher price. The practice, called bachaqueo (bachaco in Spanish means ant, which carries large loads on its back) is illegal, but has become extraordinarily common.

“[Bachaqueo] has been one of the things that has made the crisis tolerable,” said David Smilde, a Venezuela expert at the Washington Office on Latin America (WOLA), in an interview with Humanosphere. “This has actually provided some economic relief, to people that most need it.”

By reselling scarce goods to those who cannot wait in line or cannot find the goods in stores, Venezuelans can earn much more than what they would otherwise make at minimum wage. Many people who are underemployed or unemployed hundreds of thousands of people buy and resell to supplement their jobs, or have given up their work completely to do the practice full time.

“We had a carpenter working on our house,” said Smilde, “and he just kind of disappeared. … And so another worker that lived by him went over there, and he was no longer doing carpenting. He was just bachaqueando, i.e. buying and reselling goods.”

Smilde lives in Venzezuela’s capital Caracas, which is less strongly hit by food scarcity and power shortages but has some of the highest prevalence of the illicit practice in the country.

Last August, the government reactivated a campaign to stop Venezuelans from buying and reselling since the practice is one of the main causes of the scarcity of commodities. Around the same time, Maduro announced a law aiming to strengthen police measures and eradicate the practice altogether. The law proved mostly useless, however, as resellers became increasingly discreet and simply renewed their mechanisms to avoid being caught.

Now, government authorities are making more of an effort to crack down. According to William Contreras, national superintendent for the defense of socioeconomic rights, the bachaqueo will soon be eliminated altogether, Noticias24 reported.

“The bachaqueo is a crime and is paid with six to 10 years in prison. The operations of organized groups that break the law are punishable under the Law Against Organized Crime and Terrorism Financing,” he said.

But although the government is attempting to toughen its stance against illegal resellers, the practice has already spread; Venezuelans are dependent on the income it provides, and it is now a more complex problem to combat. Out of every 100 in lines for food, medicine and other goods, an estimated 70 percent are buying to resell at higher prices. Today, there are hundreds of thousands who take part in the practice.

In any case, stopping illegal resellers is not a solution to Venezuela’s crippling economy nor its humanitarian crisis.  Some government initiatives, such as Mercal – the nationwide state supermarket that sells scarce products at low prices – somewhat ease the tension. However, until there are market-determined prices instead of fixed ones, there will still be incentive for Venezuelans to buy and resell goods.

“It’s a tough situation,” said economist Tony Boza to teleSUR, “where the people are feeling an enormous pressure, because really salaries don’t reach, people have to make long queues, people are in permanent stress, this is undeniable.”

5/9/16: This story has been edited to clarify that scarce goods are resold at a higher price.

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Lisa Nikolau

Lisa Nikolau is a Madrid-based reporter for Humanosphere, covering gender equality, indigenous rights and poverty in Latin America and worldwide. Find her on Twitter at @lisanikolau, email lisa.nikolau@humanosphere.org or see her latest work at www.lisanikolau.com

  • Eva A. May

    This article is confusing, switching between whether the articles sold by bachaqueros are sold at higher or at lower prices – I think that the line…”Many Venezuelans have turned to using a form of arbitrage by waiting many hours in line to buy and resell price-controlled goods elsewhere at a cheaper price” should state that they resell the price-controlled goods at a higher price. A few paragraphs later, the article states that the system works because bachaqueros are able to sell products at affordable prices, and earn more than they could at a minimum-wage job. I think that the primary reason the bachaqueros are able to thrive is that they make hard-to-get products (many of which are actually staple goods) accessible for people who cannot stand in the long lines to purchase the products they need – making the resell price potential much more lucrative as items get scarcer and scarcer in government-controlled retail outlets. It will be a tough practice to control unless the supply of the goods can increase, easing up lines and making access possible and realistic for a greater percentage of the population.

    • Lisa Nikolau

      Eva, thank you for your comment, the story has been edited to clarify that reselling is at a higher price.