Chavez takes over American Company
Posted: Sun Mar 01, 2009 10:52 am
Chavez Orders Takeover of Venezuelan Rice-Processing Mills
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By Daniel Cancel
March 1 (Bloomberg) -- Venezuelan President Hugo Chavez sought to tighten his grip on South America’s third-largest economy as he ordered National Guard troops to seize control of rice-processing mills for allegedly failing to observe government price controls.
“Some companies are refusing to follow the government’s rules,” Chavez said yesterday on state television. “I’ve ordered the intervention in those industries to protect the people, not the bourgeoisie.”
Chavez warned companies attempting to stop production that they risk having their mills nationalized without compensation. Government-owned farms have increased rice production and bought new machinery, and there is no excuse for shortages of white rice, he said.
Chavez, 54, has asserted growing control over prices and production in his self-declared drive to impose socialism on the nation of 28 million. Since winning re-election to a second term in 2006, he has forced foreign oil companies into joint ventures and nationalized utilities, the cement industry, a steel mill and a bank.
“This is a process of the state absorbing different distribution and production chains that they consider strategic,” said Carlos Machado Allison, an economist at the Instituto de Estudios Superiores de Administracion, a business school in Caracas. “This will only exacerbate food inflation and drive the little private investment that’s left away.”
Price Controls
Chavez, a former Army officer, has imposed price controls for staples such as rice, pasta, cooking oil and milk in a bid to control inflation fueled by government spending on social programs for the poor. Venezuela’s inflation rate last year was 32 percent, the highest among 78 economies tracked by Bloomberg. Food prices jumped 47 percent.
The government raided a plant owned by the country’s largest rice-processing company, Empresas Polar SA, two days ago and seized 16,000 tons of raw rice, El Nacional reported. A spokesman for Polar called the seizure “illegal and arbitrary,” the newspaper said.
The Agriculture Ministry said it would temporarily occupy the Arroz Primor mill owned by Empresas Polar to assure that the company packages the highest amount of rice for sale under price controls, El Nacional said yesterday. It also planned to take over a second mill, El Nacional reported on its Web site, citing Agriculture Minister Elias Jaua.
Phone calls by Bloomberg News to Polar’s corporate offices weren’t answered yesterday.
Rice Mill Association
The Venezuelan Rice Mill Association, known as Asovema, lists 11 companies as members on its Web site, including Minnesota-based Cargill Inc.
Lisa Clemens, a Cargill spokesperson in Minnetonka, Minnesota, didn’t immediately return telephone and email messages seeking comment. A security guard at Cargill’s office in Caracas said there was no one available to comment.
Rafael Torres, a supervisor at the Iancarina CA processing plant in Venezuela’s Portuguesa state, said he was unaware of Chavez’s order and that the plant was operating normally.
Chavez issued 26 decrees last July increasing his control over food storage and distribution and allowing the state to jail company owners for hoarding. The president, who has been in office since 1999, won a referendum Feb. 15 to abolish term limits and will run for a third, six-year term in 2012 general elections.
Forces Losses
Private business groups like Cavidea, which represents about 85 private food companies, say price controls force companies to operate at a loss.
Chavez said rice processors have been buying the raw material from local farmers but refuse to sell white rice at the controlled price. Instead, they add colors and artificial flavors to evade the controls, which apply to white rice.
Venezuela, the biggest oil exporter in the Western Hemisphere, has seen export revenue plunge along with oil prices, which are down 56 percent in the past year.
Chavez has yet to pay companies including Exxon Mobil Corp., Cemex SAB, Ternium SA, and Banco Santander SA for their assets, which Caracas-based consulting firm Ecoanalitica estimates at about $11 billion.
To contact the reporter on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net.
Last Updated: March 1, 2009 00:01 EST
Print
Email | Print | A A A
By Daniel Cancel
March 1 (Bloomberg) -- Venezuelan President Hugo Chavez sought to tighten his grip on South America’s third-largest economy as he ordered National Guard troops to seize control of rice-processing mills for allegedly failing to observe government price controls.
“Some companies are refusing to follow the government’s rules,” Chavez said yesterday on state television. “I’ve ordered the intervention in those industries to protect the people, not the bourgeoisie.”
Chavez warned companies attempting to stop production that they risk having their mills nationalized without compensation. Government-owned farms have increased rice production and bought new machinery, and there is no excuse for shortages of white rice, he said.
Chavez, 54, has asserted growing control over prices and production in his self-declared drive to impose socialism on the nation of 28 million. Since winning re-election to a second term in 2006, he has forced foreign oil companies into joint ventures and nationalized utilities, the cement industry, a steel mill and a bank.
“This is a process of the state absorbing different distribution and production chains that they consider strategic,” said Carlos Machado Allison, an economist at the Instituto de Estudios Superiores de Administracion, a business school in Caracas. “This will only exacerbate food inflation and drive the little private investment that’s left away.”
Price Controls
Chavez, a former Army officer, has imposed price controls for staples such as rice, pasta, cooking oil and milk in a bid to control inflation fueled by government spending on social programs for the poor. Venezuela’s inflation rate last year was 32 percent, the highest among 78 economies tracked by Bloomberg. Food prices jumped 47 percent.
The government raided a plant owned by the country’s largest rice-processing company, Empresas Polar SA, two days ago and seized 16,000 tons of raw rice, El Nacional reported. A spokesman for Polar called the seizure “illegal and arbitrary,” the newspaper said.
The Agriculture Ministry said it would temporarily occupy the Arroz Primor mill owned by Empresas Polar to assure that the company packages the highest amount of rice for sale under price controls, El Nacional said yesterday. It also planned to take over a second mill, El Nacional reported on its Web site, citing Agriculture Minister Elias Jaua.
Phone calls by Bloomberg News to Polar’s corporate offices weren’t answered yesterday.
Rice Mill Association
The Venezuelan Rice Mill Association, known as Asovema, lists 11 companies as members on its Web site, including Minnesota-based Cargill Inc.
Lisa Clemens, a Cargill spokesperson in Minnetonka, Minnesota, didn’t immediately return telephone and email messages seeking comment. A security guard at Cargill’s office in Caracas said there was no one available to comment.
Rafael Torres, a supervisor at the Iancarina CA processing plant in Venezuela’s Portuguesa state, said he was unaware of Chavez’s order and that the plant was operating normally.
Chavez issued 26 decrees last July increasing his control over food storage and distribution and allowing the state to jail company owners for hoarding. The president, who has been in office since 1999, won a referendum Feb. 15 to abolish term limits and will run for a third, six-year term in 2012 general elections.
Forces Losses
Private business groups like Cavidea, which represents about 85 private food companies, say price controls force companies to operate at a loss.
Chavez said rice processors have been buying the raw material from local farmers but refuse to sell white rice at the controlled price. Instead, they add colors and artificial flavors to evade the controls, which apply to white rice.
Venezuela, the biggest oil exporter in the Western Hemisphere, has seen export revenue plunge along with oil prices, which are down 56 percent in the past year.
Chavez has yet to pay companies including Exxon Mobil Corp., Cemex SAB, Ternium SA, and Banco Santander SA for their assets, which Caracas-based consulting firm Ecoanalitica estimates at about $11 billion.
To contact the reporter on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net.
Last Updated: March 1, 2009 00:01 EST
