Smugglers turn Venezuelan crisis into Colombian cashout

TROCHA EL CEREZO, Colombia —  It’s pitch black outside as Lieutenant German Trujillo patrols a bumpy stretch of Colombia’s eastern border. He’s on the lookout for vehicles smuggling gasoline, beef, chicken, whisky, and all other sorts of contraband trafficked from Venezuela along a network of more than 50 unmarked trails.

“We call those guys the moscas [mosquitoes],” Trujillo says after driving by two men standing by the side of the isolated road with motorcycles. “Their job is to alert the smugglers that we are coming.”

Hundreds of smugglers cross into Colombia each night supplying a $3 billion a year black market that has contributed to product shortages in Venezuela.

As Venezuela’s currency crashes and market prices plummet, the incentive grows to smuggle cheap goods into Colombia.

Trujillo, 29, says most Venezuelan contraband has historically been gasoline, which currently sells for less than 1 cent a gallon in Venezuela but $2 a gallon in Colombia. Corn flour has also been a popular black-market item because it’s subject to price controls in Venezuela and costs 10 times more in Colombia.

But now, with the Venezuelan bolivar worth just one-twentieth what it was worth two years ago against the dollar, smugglers are diversifying their offering with a sundry of shampoos, baby formula, booze, rice, beef, poultry and toothpastes.

This underground market has created unfair competition for legitimate Colombian businesses, with losses totaling $300 million a year, according to President Juan Manuel Santos.

And on the Venezuelan side of the border, the continual drain of contraband is contributing to worsening product shortages, as basic goods get whisked out of the country.

“You come here into Colombia, and you find Venezuelan products everywhere,” Maribel Cruz, a housewife from the Venezuelan city of San Cristobal said during a recent visit to Cucuta, a Colombian border t

own.

Cruz, 37, says products that were once affordable on supermarket shelves in Venezuela are now sold at marked-up prices on the Colombian side. For example, Cruz says, the same bottle of shampoo that she used to buy in Venezuela for 37 bolivars ($.20) now sells for $6 in Colombia, making it unaffordable on her husband’s salary of around $60 a month as an auto mechanic in Venezuela.

And now she can’t even find the product back home.

“The supermarkets there are very empty, and you have to do long lines when something is available,” Cruz said. “We’re only getting shampoo in small envelopes now, and when there is none we just go without…I’m just washing my hair once every four days now.”

That’s just one of many products with massive price disparities on opposite sides of the border. Corn flour, which sells for 19 bolivares ($.08) in Venezuela, sells for ten times as much in Colombia. The same is true for a box of cereal, which sells for $.40 in Venezuela and $4 in Colombia.

A kilo of powdered milk which goes for $6 in Colombia’s open market, sells for around 25 cents in Venezuela’s price-controlled socialist economy — when it can be found, that is. “We haven’t had it since September,” said an attendant at the Cosmos supermarket in Ureña, Venezuela.

Wages are also much higher in Colombia, which means people there have more money to spend on smuggled Venezuelan goods. Colombia’s monthly minimum wage is about $257, more than 10 times that in Venezuela, where at the current exchange rate the minimum wage comes out to around $21 a month.

“As long as the Venezuelan currency stays on the ground, the incentive for contraband will continue,” Leiutenant Trujillo said. “Cucuta has a high unemployment rate, and that also means that there are lots of people here who turn to contraband for a living.”

But some say certain smuggled goods are getting harder to find.

Irene Leal, who owns a small grocery stall in Cucuta’s massive La Nueva Sexta market, says that Venezuelan powdered milk, flour, toothpaste and detergent are getting harder to find in Cucuta, even if those items are also missing from supermarket shelves in Venezuela. The scarcity of Venezuelan products, it would seem, is affecting markets on both sides of the border.

“The scarcity of goods in Venezuela is not happening because all their stuff is brought to Colombia, it’s an internal problem” Leal argued.

Price controls, nationalizations and tough labor laws, have indeed driven dozens  of companies away from Venezuela in recent years, lowering that country’s productivity.  Efforts by officials to stop contraband have also made it riskier to carry some types of items.

“Two years ago, we used to handle 30 percent Colombian merchandise and 70 percent Venezuelan. Nowadays its 80 percent Colombian stuff, and just 20 percent Venezuelan,” Leal said.

Still other products, such as beef, continue to flow steadily across the border.

On a recent Thursday night, Lieutenant Trujillo and his team of 20 men intercepted three SUVs packed from front to back with around 5 tons of meat stuffed into black trash bags and transported without any type of refrigeration or regard for health standards.

A kilo of beef fetches three times more money in Colombia than it does in Venezuela. In Cucuta, officials question how large hauls of beef slip out of Venezuela without the involvement of that country’s officials.

“The Venezuelan government has closed down some trails and that has made it riskier to bring in contraband,” said Martha Elena Gomez the director for Colombia’s National Customs Agency [DIAN] in Cucuta. “But we know that lots of levels of society are involved in contraband, from the lower ranks to the higher.”

Gomez sees no end in sight to the local trade in cheap Venezuelan goods.

“For contraband to go down, the economic situation in Venezuela has to change,” she said. “We also need more intelligence work that will let us find out who is really behind this.”

Manuel Rueda is a correspondent for Fusion, covering Mexico and South America. He travels from donkey festivals, to salsa clubs to steamy places with cartel activity.