Venezuela's Chavez seizes U.S. food giants

UPDATE 3-Venezuela's Chavez seizes U.S. food giant unit | Markets | Bonds News | Reuters

CARACAS, March 4 (Reuters) - President Hugo Chavez seized a unit of American food giant Cargill on Wednesday and threatened to take over Venezuela's largest private company, renewing a nationalization drive as the OPEC nation's oil income plunges.

Chavez's clash with the food companies, demanding they produce cheaper rice, came less than three weeks after he won a referendum on allowing him to run for reelection and marked his first nationalization in seven months.

"I warn you this revolution means business," said Chavez, whose government has struggled with lower oil income and minor food shortages this year.

The anti-U.S. president, who has nationalized swaths of the economy, is popular among the poor for pressuring companies to produce cheap goods and for government programs that provide subsidized food in city slums.

The moves to tighten the government's grip over the food supply were criticized by the private sector and many economists who say the state distorts the supply chain and contributes to food shortages.

Chavez, an ally of communist Cuba, recently seized some rice mills belonging to Polar, Venezuela's largest private business, after accusing the food industry of skirting his price controls and failing to produce enough cheap rice.

U.S. company Cargill [CARG.UL], 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.

Chavez said he ordered the takeover because Cargill -- one of the largest privately owned U.S companies -- avoids producing basic rice that is subject to government price controls.

"Prepare the decree, we are going to expropriate Cargill. We are not going to tolerate this," Chavez said.