February 28, 2009 / 7:57 PM / 11 years ago

Chavez orders army to seize Venezuela rice mills

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

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. REUTERS/Miraflores Palace/Handout

In a spat over prices, Chavez ordered soldiers to take control of the rice factories, 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 accuses companies of overcharging — refusing to produce rice at prices set by the government.

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 swathes of the Venezuelan economy in recent years.

The former soldier warned he would nationalize the rice industry if companies tried to 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.

Chavez has in the past paid reasonable compensation for takeovers, but falling oil prices now 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. Major rice processors include privately owned Cargill and Venezuela’s main food company Polar.

Reporting by Deisy Buitrago; Writing by Frank Jack Daniels; Editing by Doina Chiacu

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