Venezuelan President Hugo Chavez seized a unit of US food giant Cargill on Wednesday and threatened to take over Venezuela’s largest private company, renewing a nationalization drive as the OPEC nation’s oil income plunges.
Chavez’s clash with the food companies, demanding they produce cheaper rice, came less than three weeks after he won a referendum on allowing him to run for re-election and marked his first nationalization in seven months.
“I warn you this revolution means business,” said Chavez, whose government has struggled with lower oil income and minor food shortages this year.
Chavez, who has nationalized swaths of the economy, is popular among the poor for pressuring companies to produce cheap goods and for government programs that provide subsidized food in city slums.
The moves to tighten the government’s grip over food supply were criticized by the private sector and many economists, who say the state distorts the supply chain and contributes to food shortages.
Chavez recently seized some rice mills belonging to Polar, Venezuela’s largest private business, after accusing the food industry of skirting his price controls and failing to produce enough cheap rice.
US company Cargill, which runs one rice mill in Venezuela, said earlier in the week it was expecting a visit from officials even though it does not produce the type of rice that is at the center of the dispute.
Mark Klein, a Cargill spokesman in Minneapolis, said the company was respectful of the Venezuelan government’s decision and expects an opportunity to clarify the situation.
“Cargill is committed to the production of food in Venezuela that complies with all laws and regulations. The rice mill was designed exclusively to manufacture Parboiled rice, which the company has done at this site for the last seven years and elsewhere in the country for 13 years,” Klein wrote in an e-mailed statement.
Chavez said he ordered the takeover because Cargill — one of the largest privately owned US companies — avoids producing basic rice that is subject to government price controls.
“Prepare the decree, we are going to expropriate Cargill. We are not going to tolerate this,” Chavez said.
It was not clear if Cargill’s other Venezuelan food units would be affected. Cargill has approximately 2,000 employees at 22 locations across Venezuela and operates 13 manufacturing plants, including oilseed and animal feed processing.
Polar, one of Venezuela’s best-known companies that produces many of its most popular food and drink brands — including its top-selling beer — has vowed to take legal action over the rice mill takeovers.
Chavez has often followed through on his nationalization threats, taking over oil, electricity, steel, cement and telecommunications companies. Sometimes, however, threatened companies have averted seizures by bowing to Chavez’s demands.
On Wednesday, he warned Polar to back down.
“If they get funny with us ... we will go for expropriation and pay them with debt bonds,” Chavez said during a televised Cabinet meeting.
Chavez has typically paid companies adequately after ordering their takeover. But several nationalizations last year have not been implemented and this year Chavez has said he would only pay for seizures with government debt paper.
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