Chávez seizes pasta plant over quotas for the poor

Chávez seizes pasta plant over quotas for the poor

By Benedict Mander in Caracas

Published: May 16 2009 03:00 | Last updated: May 16 2009 03:00

Hugo Chávez, Venezuela's president, stepped up his assault on foreign companies yesterday, seizing a pasta factory owned by US food giant Cargill in a move the government claimed was aimed at keeping a lid on rampant inflation.

Venezuelan officials accused Cargill, the world's largest trader of agricultural commodities, of not producing enough of a type of pasta sold at government-set prices and intended for the poor.

The seizure was made after the government expropriated a Cargill rice mill and other food factories in March in a crackdown on companies accused of dodging price regulations. The rules are aimed at curbing inflation and boosting food stocks.

Troops were also mobilised last weekend to assist Venezuela's state-owned oil company, PDVSA, in seizing the assets of some 60 oil service companies .

Speaking outside the pasta plant yesterday, Rafael Coronado, deputy food minister, accused Cargill of a "marked non-compliance with the law". He added that after 90 days, further action could be taken against Cargill, which has 2,000 employees at 22 sites round the country.

With inflationat almost 30 per cent and shortages of staples emerging, Mr Chávez's government is keen to be seen to addressing the problem.

But analysts fear that inflation and food shortages may worsen as plunging oil export revenues force the government to deny importing companies access to dollars, which they need because of exchange controls in force since 2003. Many companies, meanwhile, say Mr Chávez is discouraging production by threatening private property.

Last Sunday Venezuela's anti-capitalist president declared that "no land is private", heralding a new round of seizures of farms deemed "unproductive". Mr Chávez is working on a round of settlements with foreign companies whose operations in Venezuela have been nationalised.

The government agreed last week to pay the Argentine-controlled steel company Ternium $1.97bn (€1.46bn, £1.3bn) for its 60 per cent share in one of Latin America's largest steel plants, Sidor, after it was nationalised last year.

A deal with Spain's Banco Santander is also due to be announced on May 22, after its local unit, Banco de Venezuela, one of the country's biggest banks, was nationalised last year.

Mr Chávez launched his main nationalisation drive during a five-year oil boom when he took over the energy sector, but he has hardly slowed the pace in spite of tumbling crude prices in recent months.

Venezuela seized several oil service companies last week, including a large unit of Williams Companies of the US. Mr Chávez is also trying to buy the Venezuelan unit of Spain's San-tander financial group.

Copyright The Financial Times Limited 2009