Venezuela Plans Nationalization of Two Sugar Processing Plants

On Wednesday, the Venezuelan government took control of a major sugar processing plant in Zulia state that arbitrarily closed its doors in September, as well as a sugar processing plant in Tachira state that failed to comply with legally established production quotas.

By James Suggett - Venezuelanalysis.com

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A sugar production facility in Venezuela (YVKE)
A sugar production facility in Venezuela (YVKE)
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Mérida, October 23rd 2009 (Venezuelanalysis.com) -- On Wednesday, the Venezuelan government took control of a major sugar processing plant in Zulia state that arbitrarily closed its doors in September, as well as a sugar processing plant in Tachira state that failed to comply with legally established production quotas.

Agriculture and Lands Minister Elias Jaua, who was present during the takeover in Zulia state, said both plants would be nationalized by order of President Hugo Chavez. “From now on, these companies will become the property of the workers and all the people,” Jaua said to reporters from the state television channel VTV.

According to Jaua, the plant in Zulia illegally shutdown operations in early September, leaving more than 3,000 workers who were directly and indirectly employed by the plant without a job.

In a formal statement, the management of the plant said it had indeed shutdown operations and “temporarily suspended the labor relationship with the workers, in search of a definitive solution for the renewal of activities.” It said the closure was the result of “a lack of raw materials and lack of economic liquidity.”

Jaua said that the state has already arranged a shipment of sugar cane from other regions of the country in order to re-initiate production at the plant next week. He added that the state would guarantee the workers’ jobs. “This plant is totally operative; there is no reason for its paralysis from the technical point of view,” said Jaua.

The union at the plant, which represents more than 1,000 workers and had protested the closure last month, fully supports the nationalization, according to the union secretary Daniel Solarte.

“We are committed to making this company produce in an honest and transparent manner, alongside the government and the people,” Solarte told reporters. He emphasized that the 100-year old plant is of great significance to the local population’s heritage.

The government also occupied a sugar plant in Tachira state that was processing Colombian rather than Venezuelan sugar cane and neglecting to direct 60% of its refined sugar to be sold in one kilogram packages for domestic use, according to Oscar Andrade, the regional director of the Institute for the Defense of Peoples’ Access to Goods and Services (INDEPABIS).

Trade Minister Eduardo Saman, who is the former director of INDEPABIS and was also present during the takeover in Zulia state, explained that the government’s actions are in line with the Law in Defense of People’s Access to Goods and Services, or the INDEPABIS Law.

“This measure is being taken in accordance with the INDEPABIS Law, which establishes that all activity regarding a product of basic necessity may not be paralyzed; that is the reason for the occupation,” said Saman.

Sugar is considered an essential food item. Article 6 of the INDEPABIS Law stipulates that this and other “essential public services” must be provided “in a continuous, regular, effective, efficient, uninterrupted way, for the satisfaction of collective needs.”  

“When the service is not provided in such a way, the pertinent institution of the national executive will be allowed to take the necessary measures in order to guarantee the effective provision of the service,” Article 6 concludes.

The nationalization of the sugar factories is the second major government intervention in the private food production sector so far this year. In late February and early March, the government expropriated a rice factory and temporarily occupied another after inspections by INDEPABIS revealed that both factories were producing enhanced and artificially flavored rice products in order to evade government price controls.

Since 2007, the government has purchased the majority share in several sectors of the economy, including the electricity, cement, steel, oil, and telecommunications sectors.