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Tue, Feb 12, 2008 - Page 10 News List

Chavez threatens to nationalize Swiss milk plants

AP , CARACAS

Venezuelan President Hugo Chavez warned that his government could expropriate some milk plants to confront shortages, singling out Italy-based Parmalat SpA and Swiss-based Nestle SA.

Chavez mentioned the two companies -- both of which have operations in Venezuela -- during his weekly program on Sunday, saying such 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."

Sporadic shortages of basic goods like milk, chicken, flour and sugar have irritated consumers 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, while the government notes that strong economic growth has boosted demand for meat and milk.

Chavez also accused his opponents of plotting to ensure food shortages by hoarding supplies ahead of state and local elections in November.

"We're facing an economic conspiracy and we're obliged to act," he said, withing giving details.

In another measure, Chavez announced the government is raising its government-set consumer price for rice by 31 percent as an incentive to help boost rice production. Rice farmers will see even larger increases while benefiting from subsidies, he said.

Venezuela has long imported most of its food and Chavez's government has found itself hard-pressed to change that. He said on Saturday the government will create a US$500 million fund to boost the dairy industry.

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