Chavez to send troops to another rice-processing plant Monday

CARACAS, Venezuela _Government troops will occupy Venezuela's biggest rice-processing plant on Monday, President Hugo Chavez announced Sunday, as the socialist leader expanded his crackdown on private companies that evade government price caps on their products.

"They call me a tyrant and a dictator," Chavez said, referring to his opponents. "But I'm here to safeguard the public and follow the constitution."

Chavez sent soldiers to occupy their first rice processing plant on Saturday, a facility in the state of Guarico in central Venezuela owned by Grupo Polar, the country's largest food producer.

Agriculture Minister Elias Jaua told Chavez on his televised Sunday talk show, "Hello President," that troops will seize a second rice processing plant in Portuguesa state in western Venezuela on Monday.

Chavez also threatened to expropriate companies that resist him.

The president is tightening his control over the private sector two weeks after Venezuelans strengthened his political hand by abolishing term limits so he can seek re-election for another six-year term in 2012.

The move comes days before Chavez is expected to take his first unpopular austerity measures in the face of a coming recession that will end five years of economic boom.

The global oil price drop is projected to cost Venezuela about half of its export income in 2009 and 25 percent of its government revenue.

Chavez has been steadily taking control over Venezuela's economy since gaining office 10 years ago.

Besides price controls, Chavez has ordered government control over four major oil projects and nationalized big steel, dairy and cement companies.

Many of Chavez's moves to extend government control over the economy have been responses to private sector efforts to defy him.

That's the case with the latest developments.

In 2003, Chavez capped prices on dozens of basic foodstuffs - including chicken, sugar, meat and rice - to try to contain inflation.

The measure has had limited success. Inflation rose to 31 percent last year, the highest in Latin America, and companies learned that by slightly changing their product offerings, they could escape price controls.

Canned tuna fish manufacturers, for example, raised prices by introducing one version of canned tuna with peas and another with a spicy flavoring.

Chavez is accusing rice producers of carrying out a similar move.

"This means higher profits for the producers," Chavez said on Sunday. "They invent flavored rice, which is more expensive. They've denied they're doing this 100 times. But I'm tired of it."

Private companies across the board have complained that government price controls force them to lose money by selling their goods at less than the cost of production.

The price controls have led companies to reduce production, which has led to constant shortages of goods. A year ago, consumers felt like they had won the lottery when they were able to find eggs or milk at their local supermarket. Chavez raised dairy prices, and the products reappeared.

Shortages this year have included sugar, coffee and toilet paper.

Chavez said Sunday that the presence of troops at the rice plant in Guarico had already increased production. Government officials said that Grupo Polar had flavored 90 percent of the rice produced at the Guarico plant to sell it at a higher price.

The owners "have been trying to fool the public," Jaua told Chavez.

The president's original order on Saturday called for troops to occupy all rice mills, but they have yet to enter a plant in Portuguesa owned by Cargill, the U.S.-based multinational. That move likely would draw a sharp protest from the Obama administration.

Chavez has said he wants better relations with President Obama, but on Sunday he said that recent negative reports by the Obama administration about Venezuela had him thinking that Obama would simply represent a continuation of President Bush.

Chavez's move against the rice producers will enrage businessmen and market-based economists.

Franklin Rojas, a Caracas-based economist, said the Venezuelan government should be taking steps to encourage private investment to soften the coming hard times.

"In Venezuela, it's the reverse," Rojas said.

Rojas added that Chavez's latest moves reflect his goal of establishing a socialist state "just like in Cuba where the private sector has no role."

Anticipating that kind of criticism, Chavez told Venezuelans on Sunday that "some people think we're planning to take their homes, their cars, their computers, their small farms. Don't believe it. Those are lies told by the oligarchy."

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