* Cargill takeover renews Chavez nationalization drive
* Tightening control over food comes after some shortages
* Chavez emboldened after referendum victory last month
* Cargill "respectful," seeks talks to resolve situation
(Adds Cargill statement, background, paragraphs 8-10, 13)
By Patricia Rondon
CARACAS, March 4 President Hugo Chavez seized a
unit of American 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 reelection 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.
The anti-U.S. president, 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 the 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, an ally of communist Cuba, 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.
U.S. company Cargill [CARG.UL], which operates 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.
Cargill said on Wednesday night it was "respectful" of the
Venezuela decision but seeks talks to resolve the situation.
"Cargill is committed to the production of food in
Venezuela that complies with all laws and regulations," Cargill
spokesman Mark Klein in Minneapolis, Minnesota, told Reuters.
"Cargill expects the opportunity to clarify the situation
with the government and is respectful of the Venezuelan
government decision," Klein said. "The rice mill was designed
exclusively to manufacture parboiled rice, which the company
has done at this site for the last 7 years and elsewhere in the
country for 13 years."
Chavez said he ordered the takeover because Cargill -- one
of the largest privately owned U.S. companies -- avoids
producing basic rice that is subject to government price
"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 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
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.
While Chavez's nationalizations tend to be widely
supported, periodic shortages of basic goods have hurt his
popularity in recent years.
Venezuelan shoppers have faced shortages of white rice sold
at a low government-set price in recent weeks, while stores
have ample supplies of parboiled rice which is not subject to
Venezuela's rice millers association blames the shortages
on insufficient supplies of the grain, while the government
says the mills are deliberately producing small quantities of
white rice to skirt price controls.
On Wednesday, Chavez also ordered his ministers to inspect
companies producing goods ranging from toilet paper to
cars,which have been hard to buy at times in Venezuela.
Venezuela is the third-largest buyer of U.S. rice.
(Writing by Saul Hudson, Editing by Frank Jack Daniel and Eric