Venezuela’s Chavez decrees expropriation of farm supply company, promises lower prices

Monday, October 4, 2010

Chavez decrees expropriation of farm business

CARACAS, Venezuela — Venezuelan President Hugo Chavez signed a decree Monday to expropriate a leading farm-supply business, promising to bring down prices of seeds and fertilizers as his government takes control.

Chavez said Monday night that he signed the decree for the “forced acquisition” of Agroislena CA.

“We’re going to pay them what it really costs,” he said in a telephone call to a talk show on state television. He read aloud parts of the decree, which takes effect on Tuesday, saying the company had become an “oligopoly” and was speculating with prices of goods such as fertilizer.

He called it a step toward boosting Venezuelan agriculture that would also bring down production costs.

Agroislena was founded in Venezuela more than five decades ago by Spanish immigrants from the Canary Islands and has grown into a market leader with branches across the country.

The company’s board of directors rejected the measure in a statement earlier Monday and urged Chavez to reconsider.

“It’s very hard for us to believe that a business like Agroislena could end up being expropriated, and the only explanation that occurs to us right now is that the president … hasn’t been sufficiently well informed,” the company said. It predicted the state takeover would “produce adverse effects for national agricultural production.”

It said the Spanish-owned company has made the biggest investments of its history during the past 11 years, and currently sells supplies on credit to more than 18,000 farmers.

Agriculture Minister Juan Carlos Loyo told Chavez during the program that starting Tuesday the government will assign new management at the company’s approximately 64 stores, 12 silos and eight storage sites.

A few dozen workers protested at a company business in Portuguesa state on Monday, holding signs saying: “No to the expropriation.”

Chavez’s socialist-oriented government has nationalized or expropriated businesses in sectors ranging from cement to retail stores.

Chavez said Sunday that he also plans to increase seizures of farmland deemed underused in order to aid small farmers. The program has been under way for years, and Loyo said the government plans to seize an additional 250,000 hectares (more than 600,000 acres) in the coming month.

Jose Manuel Gonzalez, a newly elected opposition lawmaker for Guarico state, said years of rising food imports show the farm seizures have been a failure.

“Everything that falls into the hands of the government is destroyed,” Gonzalez said.

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