Venezuela Expropriates Cargill Rice Plant that Evaded Price Controls

Mérida, March 5th 2009 (Venezuelanalysis.com) — Following a week of inspections of privately owned rice processing facilities aimed at assuring the supply of essential foods at regulated prices, the Venezuelan government initiated expropriation procedures of a plant owned by the multi-national food company Cargill that was found to be modifying all its rice so as to evade price controls on basic food items.

“Initiate the process of expropriation of Cargill, and with that a legal investigation, since what they are doing is a flagrant violation,” Venezuelan President Hugo Chávez declared on national television Wednesday.

Vice Minister of Agriculture and Land, Richard Canán, reported the results of the investigation, which was carried out by Venezuela’s Institute in Defense of People’s Access to Goods and Services (INDEPABIS) at the request of rice producers in the region around the processing plant in Portugesa state.

“[Cargil] is not even producing one single kilogram of regulated rice, but they do produce 2,400 tons of pre-cooked rice, which is not subject to regulation” said Canán. Also, INDEPABIS found approximately 18,000 tons of non-modified rice stored in the plant’s warehouse.

Cargill has not yet publicly responded to the Venezuelan government’s decision.

Agriculture and Lands Minister Elías Jaua said the first step in the expropriation would be the temporary occupation of the plant in order to re-start the production of rice at the controlled price. The plant has thus been occupied as of Thursday afternoon.

The Chávez government’s investments in agricultural production over the past ten years have increased rice production by 94%, but this still falls short of demand, which has also risen as the result of twenty trimesters of economic growth and government programs which expand the purchasing power of the poor.

Venezuelans experienced widespread shortages of rice last year when the world food crisis set in and prices soared. Pledging to take stronger measures to guarantee food access to all citizens, Chávez passed the Law on Food Security and Sovereignty with decree authority granted to him for 18 months by the National Assembly. The law defines food security as a matter of “public utility,” permitting Chávez to order expropriation of property necessary to move toward that goal.

“The revolutionary government will not hold back when it comes to food security,” said Chávez Wednesday.

The president then warned Venezuela’s largest food producer, Polar, that “we could expropriate all Polar’s plants if necessary and we’ll pay you in bonds,” instead of cash. The Venezuelan constitution obligates the government to pay a fair indemnity for expropriated property.

Polar responded in an official company statement, “Polar enterprises have always complied with the law and will continue to do so.”

Last Sunday, the government took temporary administrative control of a Polar plant in Guárico state that was also enhancing its rice to avoid price controls. With the support of the workers, the plant is now processing rice that Polar had stored away, and the government is in discussions with the owners about next steps, according to INDEPABIS.

State inspectors found no irregularities at another private rice plant in Guárico state, so the government did not intervene in that plant.

After ordering the Cargill expropriation, Chávez told his ministers to begin inspections of producers of flour, oil, and toilet paper. He said the state “will take decisive measures in favor of the people against those who do not abide by the law.”

Earlier this week, the national superintendent of silos, storage, and agricultural warehouses, Carlos Osorio, said access to food is an issue of “the security of the state” and that the government will not tolerate “industries that wish to assault consumers to make a greater profit.”

Cargill produces food and provides agricultural, financial, and industrial services in 67 countries, according to the company website. It reported nearly $4 billion in net earnings in 2008, a 36% increase over the previous year, while the number of people suffering hunger worldwide increased to a record 923 million.