After threat of cutting off oil, Chavez says Venezuela may expropriate milk plants

Eds: Moving on financial services.

By IAN JAMES

Associated Press Writer

CARACAS, Venezuela (AP) -- President Hugo Chavez warned that some milk plants may be expropriated to ease shortages, singling out Italy's Parmalat SpA and Switzerland's Nestle SA.

Chavez mentioned the two companies during his weekly program Sunday, saying international companies sometimes "pressure" Venezuelan farmers to obtain their milk for export.

"It's no use for us to be setting up plants (if) then there is no milk for the plants because Parmalat or ... Nestle take it all away," Chavez said. "That's where I say this government has to tighten the screws."

If companies ensure a supply through "blackmail, offering money up front" while leaving state-run plants without enough milk, "that's called sabotage," Chavez said. He added that in such cases, "the plants must be taken over and expropriated."

There have been sporadic shortages of basic goods like milk, chicken, flour and sugar for months, and the problem has been considered a political liability for Chavez since he lost a vote last year on constitutional changes that would have let him run for re-election indefinitely.

Critics blame government price controls and a poor investment climate. The government says strong economic growth has boosted demand for meat and milk and other products.

Francois-Xavier Perroud, a spokesman for Nestle in Vevey, Switzerland, said he read news accounts quoting Chavez but that "the company in Venezuela has not received any official notification, any official statement that anything is being thought about or considered or being planned."

Chavez also accused opponents of plotting to ensure food shortages by hoarding supplies ahead of state and local elections in November. He did not elaborate but said, "We're facing an economic conspiracy, and we're obliged to act."

Chavez also announced that Venezuela is raising its government-set consumer price for rice by 31 percent as an incentive to boost rice production. Rice farmers will see even larger increases while benefiting from subsidies, Chavez said.

Venezuela, a major oil producer, has long imported most of its food and Chavez's government has found itself hard-pressed to change that.

Chavez on Saturday announced the government is creating a $500 million fund to boost the country's crippled dairy industry, saying it will support preferential loans for farmers and other subsidies.