Chavez orders army to seize Venezuela rice mills

Venezuela's President Hugo Chavez attends a Catholic mass in Caracas February 27, 2009. Chavez attended the mass to commemorate the 20th anniversary of the bloody ''Caracazo'' riots.

CARACAS (Reuters) - Venezuelan President Hugo Chavez on Saturday sent troops to temporarily take over rice processing plants in the South American nation, his toughest move against industry since a referendum win this month.

In a dispute over the price of one of Venezuela's staple foods, Chavez told soldiers to take control of the rice mills, which could include installations owned by U.S. food giant Cargill.

"I have ordered the immediate intervention in all those sectors of agro-industry, intervention by the revolutionary government," Chavez said during a speech to commemorate deadly riots over high prices in Venezuela 20 years ago.

Chavez accused the companies of disrupting the supply chain by refusing to produce rice at prices set by the government.

Government officials entered a mill owned by Venezuela's top food company, Grupo Polar, on Saturday afternoon and said they would increase its output overnight.

Earlier this month, Chavez won a referendum vote on allowing him to stay in office as long as he wins elections.

The socialist president, who has already governed for a decade, often radicalizes his policies after electoral victories and has nationalized large swaths of the Venezuelan economy in recent years.

Venezuela's rice millers association said its members were producing what they could with available stocks of the grain and had not been formally notified of Chavez's order.

The former soldier warned he would nationalize the rice industry if companies tried to further interfere with supplies of the grain.

"I will expropriate them. I have no problem with that and I'll pay them with bonds. Don't count on me paying with hard cash," he said.

In the past, Chavez has paid reasonable compensation for takeovers, but falling oil prices limit his ability to pay for such moves.

The government imposes price controls on basic products and frequently accuses private companies of hoarding food.

Venezuela grows enough rice for domestic consumption and exports a small amount.

(Reporting by Deisy Buitrago; Writing by Frank Jack Daniel)