May 15, 2009 / 8:40 PM / 11 years ago

Venezuela temporarily seizes Cargill pasta factory

CARACAS (Reuters) - Venezuelan officials including soldiers on Friday temporarily seized a pasta factory owned by U.S. food giant Cargill Inc in a pricing spat, the latest move by President Hugo Chavez’s government against foreign companies.

Since taking office a decade ago, strident U.S. critic Chavez has nationalized large swathes of OPEC member nation Venezuela’s economy, including a rice mill owned by Cargill earlier this year and dozens of oil service companies last week.

Bolstered by resilient approval ratings, the former soldier plans to keep moving against the private sector this year as he pushes ahead with his plan to build a socialist state in South America’s top oil exporter.

“Yes, because we are determined to recover full petroleum sovereignty and it turns out that in Venezuela almost everything was privatized,” Chavez said in Argentina on Friday when asked about plans to take over more firms after seizing oil service companies a week ago.

Chavez, whose government is buying a local unit of Spain’s Santander finance group, said he had no plans to buy more banks “for now,” using one of his favorite catchphrases that implies he may move against financial institutions in the future.

Friday’s move could lead to the permanent takeover of the pasta factory. In March, Chavez ordered the nationalization of Cargill’s rice mill a week after a similar temporary seizure.

Deputy food minister Rafael Coronado said the government would run the factory for 90 days after officials found it was not producing enough of a type of pasta sold at cheap, government-established prices.

“There was a marked noncompliance with the law,” Coronado said, flanked by soldiers, in a television broadcast from outside the plant in the coastal state of Vargas.

Coronado said the government could decide to take further action against the plant after the 90-day period.

Cargill is one of the world’s largest privately owned companies with a dozen plants and about 2,000 employees in Venezuela. It declined to comment on Friday’s move.

HARDLY SLOWED

Chavez won a referendum in February that allows him to stay in office as long as he keeps winning elections. His approval ratings have stayed above 60 percent in recent polls despite spending cuts to offset lower oil revenues this year.

He launched his main nationalization drive in 2007 during a five-year oil boom when he took over the energy sector and the main telecommunications company, actions lauded by his mainly poor supporters.

He has hardly slowed the pace despite crude prices tumbling in recent months. Struggling with Latin America’s highest rate of inflation, he has moved against several food processing companies accused of dodging government low-price regulations and stepped up takeovers of farms deemed idle.

He nationalized the Cargill rice plant in March because it produced a type of rice not included in price controls. He also threatened to nationalize the country’s biggest private employer, brewer and food processor Polar.

Last week Venezuela seized several oil service companies including a large unit of U.S. firm Williams Companies. Chavez is also trying to buy the Venezuelan unit of Spain’s Santander financial group.

Reporting by Frank Jack Daniel; Editing by Lisa Shumaker

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