Venezuela sees no further Cargill takeovers

CARACAS Thu Mar 5, 2009 6:04pm EST

1 of 3. A truck passes a guard station at the entrance to a Cargill plant in Valencia, west of Caracas, March 5, 2009.

Credit: Reuters/Jenny Fung

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Venezuela seizes U.S. plant

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CARACAS (Reuters) - Venezuela on Thursday said it has no plans to take over any additional holdings of U.S. food giant Cargill after leftist President Hugo Chavez ordered the seizure of the rice plant, renewing his nationalization drive.

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 reelection and marked his first nationalization in seven months.

The move shows he is likely to continue his combative style as the OPEC nation, faced with tumbling oil revenues that form the backbone of its economy, slowly begins to feel the effects of the global economic crisis.

"The measure only includes the rice plant," said Agriculture Minister Elias Jaua, adding the government has taken control of the mill and would seek an amicable agreement in its nationalization.

But he admonished Cargill, which has 2,000 employees and 13 manufacturing plants around the country, for failing to comply with government regulations that foreign investors have often found onerous.

"The state will not accept a violation of the law, it will now accept disobedience," he told reporters. "We did what the law requires us to do."

The government this week temporarily occupied rice mills owned by Venezuela's top food company Empresas Polar, which on Thursday called for dialogue and increased cooperation after Chavez said he could nationalize the entire company.

"We have maintained that the best way to increase Venezuela's food (production) is through dialogue and close collaboration between the government, agricultural producers ... and consumers," Polar said on Thursday in response to Chavez's threat.

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.

The anti-U.S. president is popular among the poor for pressuring companies to produce cheap goods and for government programs that provide subsidized food in city slums.

But Polar, the producer of Venezuela's top beer brand and key staple products such as corn flour, is also highly regarded among the OPEC nation's poor.

Chavez, an ally of Communist Cuba, said the seizure of rice mills belonging to Polar this week was temporary but warned he could take over the whole company permanently if it kept defying him.

He accuses the food industry of skirting price controls and failing to produce enough cheap rice.

The recent moves to tighten the government's grip over food supplies are criticized by the private sector and many economists who say it could contribute to food shortages.

One of the United States' largest privately-owned companies, Cargill employs 2,000 people at a dozen plants in Venezuela. It was not clear if Chavez intends to expropriate Cargill's local operations or just its one rice plant.

Cargill said on Wednesday night it was "respectful" of Venezuela's decision but seeks talks to resolve the situation.

(Writing by Brian Ellsworth; Editing by Frank Jack Daniel and Kieran Murray)

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