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UPDATE 2-Venezuela will nationalize coffee roasters-Chavez

(Adds detail, background)

CARACAS, Aug 4 (Reuters) - Venezuela’s President Hugo Chavez said on Tuesday that the country’s two largest coffee roasters would be nationalized.

The government took control on Monday of the two roasters, Fama de America and Cafe Madrid, to help supply the domestic market. The companies denied government accusations they illegally exported coffee.

“We intervened in these big companies and are preparing a study to expropriate them,” Chavez said during a televised speech at a military ceremony.

“They will become property of the people, property of the nation -- enough is enough!”

Chavez has nationalized large swathes of Venezuela’s economy, from cement and telecommunications to steel and power. Earlier this year, he nationalized a rice mill owned by Cargill Inc [CARG.UL] and dozens of oil service companies.

Chavez, a former paratrooper who has been in power for more than a decade, said he would continue nationalizing monopolies to convert them into “productive companies in hands of the workers”.

Fama de America and Cafe Madrid are two of the best known coffee brands in Venezuela.

Producers and roasters had said the South American country faced a shortage of around 300,000 quintales to ensure supply until the 2009/2010 harvest begins in October. Each quintal equals a 46-kg bag.

Critics point the finger at price and foreign exchange controls that have slowed investments in expansion and maintenance and eroded productivity of coffee plants.

Periodic food shortages, from sugar and rice to milk and meat, have dogged this OPEC-member country for years.

The government had accused roasters and growers of speculating and illegally exporting to neighboring Colombia, where prices are much higher than those fixed in Venezuela.

Fama de America denied such activity in a statement on Monday.

Coffee growers, however, have admitted to taking large amounts of green beans across the border to fetch a higher price. (Reporting by Caracas newsroom; Writing Raymond Colitt; Editing by Marguerita Choy)