Chavez Orders Expropriation of Cargill Rice Plant
March 5th, 2009Via: AP:
President Hugo Chavez ordered the expropriation of a rice-processing plant in Venezuela owned by American food giant Cargill Inc. on Wednesday because the company allegedly was not distributing rice at prices imposed by the government.
The socialist leader also threatened to nationalize Venezuela’s largest food producer, Empresas Polar, amid rising tension between his government and privately owned food producers that authorities accuse of sidestepping price controls aimed at stemming high inflation.
Chavez said Cargill’s plant in Portuguesa state violated local laws by distributing rice without printing the regulated price on its packages. He instructed Agriculture Minister Elias Jaua to “begin the expropriation process.”
“Prepare the decree and we’ll expropriate Cargill,” he said.
Cargill’s rice-processing plant in Portuguesa is one of 13 food-processing plants the Minneapolis, Minnesota-based company operates in Venezuela.
Mark Klein, a Cargill spokesman in Minneapolis, said the company is respectful of the Venezuelan government’s decision and expects an opportunity to clarify the situation.
“Cargill is committed to the production of food in Venezuela that complies with all laws and regulations. The rice mill was designed exclusively to manufacture Parboiled rice, which the company has done at this site for the last 7 years and elsewhere in the country for 13 years,” he wrote in a statement e-mailed to The Associated Press.
Earlier in the day, Empresas Polar said it had asked Venezuela’s Supreme Court to block the government from occupying one of its rice-processing plants for a lengthy inspection. The company’s Alimentos Polar subsidiary argued it was “unconstitutional, illegal and arbitrary” for authorities to occupy the rice plant for a 90-day inspection.
The government says the price controls need to be respected to control inflation and keep the prices of basic foods affordable, while businesses say the controls could drive them into bankruptcy.
“These private companies can continue functioning as long as they remain within the scope of the law and the constitution,” Chavez said Wednesday.
Venezuela’s inflation is running at 31 percent, Latin America’s highest, despite price controls imposed in 2003 on items such as rice, chicken, sugar and other products.
The government imposed new rules this week to try to prevent producers from cutting output of price-regulated products or from modifying products to circumvent price controls, such as selling paella-flavored rice that does not fall under the controls.
Companies must ensure that 70 percent to 95 percent of their products are the types that fall under the price controls.
Over the past year, Chavez has nationalized Venezuela’s largest telephone, electricity and cement companies. His government also is negotiating compensation for the takeover of the country’s biggest steel maker, Sidor.
When in history has price controls ever worked? Anyone? Anyone? Bueller?
http://mises.org/story/1962
Price controls on rent worked really well in New York City. Kept the sharks from feeding off people who needed a place to live.
Water and sewer. People being forced by local governments to connect to public water and sewer when they have perfectly good wells and septic tanks/fields. That is a form of price control: forcing people to incur a cost for things that they “don’t need.”
The Amish in my area have fought this type of price control coercion and have WON the right to connect to, or pay any price for water and sewer. That in my mind is a form of price control.
Sure Chavez is a tuff nut. Sounds to me like he gives two shits about the cost of living for people in his country and will take on any and all to ensure that there is no profit taking by corporations at the expense of his people.
So whether price controls have ever worked? I don’t know. But I think that I’d rather have a Chavez than a Reagan, Bush I, Clinton or Bush II that didn’t care about price. At all.