Introduction
Price control for beef in Venezuela is explained by the negligence of the existing regime towards the marketing rules, and the impossibility to control the financial situation in the country. The farmers are obliged to work without any profit margin, which will inevitably lead to a crisis. Considering the strong determination of the government to restrict the prices for beef, the disappearance of beef from the cases is the reasonable reaction of farmers and butchers for the governmental policy.
Discussion
In fact, residents and consumers need beef, and they will purchase it independently on the price regulation regime. However, considering the fact that the main aim of this control is the price deterrence, residents will be glad to purchase beef with the lowered prices. However, the existing price control measures have nothing in common with reality, as the cost price of the beef is close to $3, while butchers are obliged to sell it for no more than $4. Actually, the price could be restricted to $8 for the butchers had an opportunity to earn and compensate for the costs. (Backman, 34)
The prices in Canada range from $4 to $11 per kilo. European Prices are ranging from $4.50 to $9.30 per kilo. Japan is the price leader, as the price for consumers ranges from $22 to $112 per kilo. This is explained by the fact that beef in Japan is imported, while the country does not have enough space for pasture. Hence, the average world price for beef is higher than the existing price in Venezuela, and it may be raised to at least to $6 per kilo.
While the price control mechanism is intended to keep the equilibrium between the supply and demand volumes, the authoritarian control mechanism caused the critical shortage of beef on the consumers’ market. The beef price in Venezuela is represented in Figure 1.
However, the artificial restriction of prices caused the essential decline in sales and import rates (Figure 2)
The chicken sales had increased inevitably for this period, as consumers had to compensate for the lack of beef with the other sources of animal proteins. Chicken is one of the optimal alternatives, and the consumption rates of chicken have been growing since may proportionally to the beef sales decline. (Davidson and Kregel, 229)
If the butchers did not accept the price control measures, the beef sales would inevitably fall, however, this decline would be lesser then the observed consumption crisis, as only part of the consumers would refuse from purchasing beef, while the control measures stimulated the disappearing of beef from the cold cases.
In fact, this may be stated of both categories of beef: cheap and expensive, as the price growth would inevitably touch both segments. Anyway, the consumption rates would not fall significantly. The existing situation originated the consumption crisis, as butchers are not willing to sell beef at the lowered prices, while they are not allowed to raise the prices.
Conclusion
Finally, it should be emphasized that the price control measures that are taken by the government of Venezuela do not fit the healthy economic control, as prices can not be kept by force. This may be crucial for the entire economic system, and in accordance with the evidence of the beef consumption, forced measures are dangerous for the entire consumption market.
Works Cited
Backman, Jules. Price Practices and Price Policies: Selected Writings. New York: Ronald Press, 2007.
Davidson, Paul, and Jan Kregel, eds. Full Employment and Price Stability in a Global Economy. Cheltenham, England: Edward Elgar, 2009.