Futures & Commodities

Chavez Threatens to Seize Foreign Milk Plants


Venezuelan President Hugo Chavez on Sunday threatened to seize milk plants owned by Switzerland's Nestle and Italy's Parmalat if they muscled state producers out of the market.

Bolstering the private sector's supply with state-financed enterprises, Chavez sought this year to end chronic shortages of food, including milk, that are weighing on his popularity.

While he has tried to encourage private companies' output with measures such as lifting prices for some regulated goods, economists worry his persistent rhetoric against producers could undermine his goal by scaring off investment.

On his weekly TV show, the socialist president complained producers run by the state or cooperatives could not increase supply because they struggled to get raw milk.

"We are not doing anything by installing plants only to find afterward there is no milk for the plants because it has all been taken by Parmalat or Nestle," he said. "This government should turn the screw."

"If, for example, Nestle or Parmalat ... show that through various economic mechanisms, or through pressure, they are taking the product and leaving state or cooperative plants without the necessary milk ... then we have to apply the constitution and we have to intervene and expropriate the plants," he said.

Chavez frequently issues conditional threats against the private sector without following through on them. But last year, he nationalized swaths of the economy, including the oil and utility sectors, in a drive to build a socialist state.

In an OPEC country flush from an oil price bonanza, even Chavez supporters are angry at bare shelves and long lines in supermarkets. There have been shortages of products like sugar, eggs and meat, but especially milk.

Economists say producers are trying to meet demand but bureaucracy and Chavez's policies, particularly price and currency controls, hamper their business.