Venezuelan Government Takes Temporary Control of Cargill Pasta Plant

On Friday, the Venezuelan government took temporary control of a pasta factory owned by the U.S. company Cargill and located in Vargas state. The vice minister for food, Rafael Coronado, said the government will run the factory for 90 days, and make a new decision in the meantime on how to proceed.

By Tamara Pearson – Venezuelanalysis.com

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Mérida, May 19th 2009 (Venezuelanalysis.com) - On Friday, the Venezuelan government took temporary control of a pasta factory owned by the U.S. company Cargill and located in Vargas state. The vice minister for food, Rafael Coronado, said the government will run the factory for 90 days, and make a new decision in the meantime on how to proceed.

Government officials explained that the temporary takeover was due to the fact that Cargill hadn't been producing the required amount of pasta at regulated prices.

A resolution made effective on March 2nd of this year said that 70% of manufactured pasta within a single company must be of the regulated kind (that is, meeting minimum standards, without additional ingredients, and sold at the regulated price), and 30% may be non-regulated pasta sold at market prices.

On May 1st another resolution was passed lowering the prices of some regulated products. The price of pasta was lowered from 3.39 bolivars ($1.57) per kilogram to 3.26 bolivars ($1.50) per kilogram.

Last year, Venezuelans experienced shortages in some foods as the world food crisis spread. President Hugo Chavez passed the Law on Food Security and Sovereignty, which established prices and quotas for 11 basic food products including pasta, rice, cheese, milk powder and tomato sauce, among other regulations.

Venezuela's Institute for the Defense of People's Access to Goods and Services (INDEPABIS) and the National Superintendent of Silos, Supplies and Agricultural Warehouses (SADA) inspected the Cargill pasta plant on Thursday and found that it was only producing 41% regulated pasta. The Integral System of Food Control (SICA) also found at that over the last 30 days Cargill had distributed 822,000 kilos of pasta, of which 650,000, or 79%, was unregulated pasta.

Carlos Osorio, from SADA, explained that two SADA workers and two military police are stationed at the plant to control the plant operations and to ensure that all the products made there are delivered to the nearby distribution center.

Osorio stressed that the government supports companies earning profit margins, as long as the needs of the population are prioritized. "We can't allow regulated products to disappear from the market and that only the unregulated products are distributed, just because of the economic dividends that these products provide," he said.

Osorio also explained that the prices had been adjusted recently to reflect the decrease in price of raw materials internationally, which Venezuelan producers had not reflected in their selling prices.

"We're going to continue carrying out these inspections ...across the food production chain... We have a Law of Food Sovereignty and Security that allows us to protect Venezuelans and this law provides measures against processing plants, distributors and markets which aren't complying with the [regulations]."

The temporary takeover follows a similar situation in March this year when the government expropriated a Cargill rice factory for not producing enough regulated rice. The factory had been modifying its rice so that it would not be considered ‘basic rice' and could therefore avoid the price controls.

Cargill is a multinational company that spans the agricultural, financial, and industrial services industries in 67 countries. Last year, it declared revenues of $120 billion, an increase of 36.5%, while its employee numbers grew by 1.3%. It started operating in Venezuela in 1986.