Hugo Chavez is well on the way to destroying Venezuela’s oil industry, so he’s starting in on the food industry:
President Hugo Chavez seized a local unit of American food giant Cargill on Wednesday and threatened to nationalize Venezuela’s largest private company, Polar, as he demanded industry produce cheaper rice.
The clash with the food companies came less than three weeks after Chavez, a Cuba ally who has nationalized swaths of the Venezuelan economy, won a referendum on allowing him to run for reelection. . .
In recent days Chavez has seized some Polar rice mills after accusing the food industry of skirting his price controls and failing to produce enough cheap rice.
U.S. company Cargill, which operates one rice mill in Venezuela, said earlier in the week it was expecting a visit from officials even though it does not produce the type of rice that is at the center of the dispute. . .
Polar, which is the country’s largest private sector employer and produces and distributes everything from beer to flour, has vowed to take legal action over the rice mill takeovers.
(Via Hot Air.)
I don’t tend to go in for historical determinism, but this chain of events has been very predictable. Chavez’s policies lead to runaway inflation (and a horrific surge in crime rates). Food prices soar. Chavez institutes price controls on food. Price controls create shortages (as they always do) when businesses refuse to sell at a loss. Chavez then nationalizes the businesses.
What happens next? Agricultural production plummets under government administration, of course. Venezuela becomes even more dependent on food imports (Venezuela already imports two-thirds of its food, half of that from the United States). Those foreign food suppliers won’t sell at a loss and can’t be nationalized, so food shortages become severe.
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