Firstly, the government in Venezuela offers food at artificially low prices with the aim of helping the poor. However, one problem with maximum prices is that it creates excess demand. Long queues and food shortages are reminiscent of the old Soviet Union. In addition, it seems that some unscrupulous food smugglers are buying the cheap food to sell at a profit in Colombia.
On top of this issue is the fact that falling oil revenues and a depreciating currency mean it is proving expensive for Venezuela to import the food they are trying to sell so cheap!
Primary product dependency, Prebisch-Singer Hypothesis, government regulatory failure are all in this article.
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