By Jeremy Morgan
Latin American Herald Tribune staff
CARACAS – Venezuelan troops began taking control of the country's rice processing plants, after President Hugo Chávez threatened to expropriate companies that continue to flout government regulations. Venezuela's Polar and the U.S.'s Cargill are among the two largest rice processors in the country.
"Some companies are refusing to follow the government's rules," the president said on state television on Saturday. "I've ordered the immediate intervention in those industries and I ask for the people's support to deepen the revolution."
Officials from Sada, a state agency that supervises silos and the food distribution chain, and Indepabis, a consumer defense agency, raided the plant operated by Alimentaciones Polar. The “inspection” of the Primor plant at Calabozo in Guárico state came without warning, and the reasons for it were not disclosed.
Polar, arguably one of the most successful private companies in the country, claimed that the raid had been “illegal and arbitrary,” and it linked the measure to a new government order that it said had yet to come fully into force.
The order sets new government-stipulated quotas for the production of specific types of processed rice. Guillermo Bolinaga, Polar’s director of legal and regulatory affairs, claimed that the 90 day period for companies to comply with Resolution 474 had not yet expired.
Bolinaga claimed that officials had “retained” 271 tons of rice and brought the plant to a standstill, and said the company would be lodging an appeal against the measure.
Amid a vacuum of government information, unconfirmed reports over the weekend said Resolution 474 had been issued by the Light Industries Ministry. But elsewhere, it was suggested the order had more likely come from Food Minister Alías Jaua or at least in his name.
On Monday, Jaua said there was enough raw material to maintain rice production, and a “clear guarantee” there would be sufficient supplies to meet demand. But he then claimed Polar had been “denying” white rice to the people and had no right to “make fools” of the government.
Elsewhere, it was noted that the raid took place just as employee and management representatives at the plant were about to start negotiations on a new collective bargaining agreement. It was only two days after the raid that the government announced it was “intervening” or taking over the plant.
Whether this amounted to an all-out nationalization remained and still remains unclear. On Saturday, a spokesman for Polar claimed that a group of people turned up and tried to force their way into the plant.
The group was said to have included Guárico State Governor Willian Lara and the mayor of Calabozo, who hails from President Hugo Chávez’ ruling United Socialist Party of Venezuela (PSUV).
On Sunday morning, there were noisy scenes outside the plant after a group of men in red shirts – the symbolic color adopted by Chávez and his supporters – assembled at the gate of the plant, accompanied by music at top volume.
Televised scenes showed something more resembling party time than the heavy end of an industrial dispute, although a squad from the National Guard stood by in the background.
Maracaibo Mayor Manuel Rosales, a prominent member of the opposition, condemned the government’s action at the plant as “arbitrary and exhibitionist.” Rosales went on to warn that smilar actions could be expected from the government.
“A great uncertainty over the economy exists, the content of the government’s policies isn’t known, the only thing we know is that inflation’s out of control, unemployment’s increasing and investment’s going away,” he said.
The opposition party, Primero Justicia, called on Chávez to make a better investigation of whatever problems there were in rice supply. But by then, Chávez had opened his regular Sunday radio and television broadcast, Aló Presidente, by ordering troops to take over plants.
"If they stop production I will expropriate them. I have no problem with that, and I'll pay them with bonds - don't count on me paying with hard cash," Chavez said.
Chavez said that the raids set off a “media war” which had “already begun to attack the government and tilt at the president, the tyrant Chávez, the dictatorship of Chávez.”
The president went on to declare that his critics could say what they liked about him but he was there to “comply with the constitution and safeguard the interests, the food and the health of the people.”
Jaua responded to this by saying the government was faced by cases such as Primor “diverting” rice by putting 90 percent of its output into flavored rice and only 10 percent to white rice. This was making a joke of price controls and “conditioning consumption,” he said.
Polar, for its part, answered by arguing that a lack of raw materials and the freezing of prices lay behind problems in rice supply. The cost of producing a kilo of rice was BsF4.41, when the official price was fixed at BsF2.18, said Polar Operations Director Luis Carmona.
The company, he continued, accounted for only six percent of the domestic market in rice, whereas the government controlled approximately half of output.
The solution to problems was to guarantee the supply of raw material and to adjust prices, Carmona added. He was “sure” the company could communicate with the government and convince it of the need for “adjustments.”
Venezuela’s largest business organization, the Federation of Chambers of Commerce and Industry (Fedecámaras) unsurprisingly also rejected the raid, claiming that Chávez was using “unconstitutional and socialist laws” introduced while he enjoyed 18 months of special powers. In doing so, Fedecámaras President José Manuel González claimed, the president was violating the laws safeguarding private property.
Accusing Chávez of wasting $900 billion during his ten years in power, González claimed the president wasn’t telling the truth by saying national rice output totaled 1,400,000 tons, when “in reality the country has become an importer of rice.”
It was the government that had the “great monopoly” on rice, he added, implying that if there were supply problems these were down to the government, not private companies.
“The people can’t be manipulated neither by lying to the country, nor with figures that aren’t real,” González declared. Venezuela used to export rice, and now it was obligating companies to produce at a loss, he added.