The mythical cereal company is forced to leave the country after more than half a century of activity

After more than 50 years, the renowned company Kellogg's ceased operations in Venezuela by closing its production plant located in the city of Maracay. In a statement posted on the door of the complex, workers were explained that their liquidation and other labor commitments were included in the salary they just paid on the day the factory closed. The decision caught the approximately 400 employees who worked in it by surprise.

Kellogg's joins thousands of companies that have left the Bolivarian nation in recent years. The company had been forced to reduce its production and some of its brands were no longer marketed. In another statement, the company details that "the deterioration of the economic and social situation of the country has caused the company to stop its operations and leave, being suspended the distribution and marketing of its products throughout the country”.

Government officials have not hesitated to take Kellogg's facilities, as they did with those of Kimberly & Clark, a well-known personal care products company, also from the United States, which ceased its activity in Venezuela in 2016. On the other hand, the centennial brand of cleaning Clorox also underwent the intervention of the Government of Nicolás Maduro in 2014 to maintain jobs, despite the fact that its production has not stopped falling since that year.

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Juan Torrealba worked on Kellogg's production line and said that -if there were no power outages or any other inconvenience- the factory produced an average of 14 tons of Corn Flakes per day. Now, Torrealba has serious doubts that with the intervention of the Government this production will be maintained: "one would like to be optimistic, but seeing what has happened with other companies intervened by the State is very difficult to be".

Background

It is estimated that in the last 15 years more than half a million businesses have closed in this South American country. The situation has worsened in the last 18 months due to hyperinflation and the inability to access foreign currency by the industrial sector. The constant wage increases imposed by the Government cause many companies are in bankruptcy for not being able to cope with such increases. According to Conindustria, 3 million jobs have been destroyed since 2015.

The sector of the food industry has suffered a reduction of 70% caused by the control of change and prices imposed by the Government 15 years ago. The reduction has accentuated the shortage of food in supermarkets, forcing Venezuelans to make long pilgrimages to get basic products. Although the State has almost 300 food companies – intervened and state-owned – and controls the entire chain of production, distribution and sale of products, it has not been able to stop shortages.

From the Annual Meeting of Fedeagro, important businessmen warned about the impossibility of fulfilling the commitments with international suppliers of raw materials in the absence of liquidation of foreign currency. Another big problem is that the Venezuelan field barely produced 25% of the demand in 2017 because it did not receive the inputs for sowing in time, whose sale is monopolized by the government, and going to the black market is too expensive for local farmers.

Latin American Post | José María González
Translated from “ No más Kellogg´s en Venezuela”