Reprinted from Caribbean Net News
caribbeannetnews.com

Chavez may seize supermarkets as food prices surge

Thursday, February 15, 2007

by: Alex Kennedy and Theresa Bradley

CARACAS, Venezuela (Bloomberg): Venezuelan President Hugo Chavez has threatened to nationalise supermarkets that sell meat above the government-set price as his administration struggles to stem a surge in the cost of basic foodstuffs.

Chavez told a gathering of pensioners in Caracas he's waiting for the "first excuse" to take over butcher shops and supermarket chains that manipulate stockpiles of beef and other foods to artificially boost prices. The government blamed manipulators for a 4 percent surge in the cost of food in January that pushed inflation to the fastest in two years.

"If they continue to violate the interests of the people, I'm going to take the meat markets and supermarkets," Chavez said. "I'll nationalize them."

Chavez, who won re-election for a third term in December, is raising the prospect of seizures to push companies to support his social programs and transform the oil-rich nation into a socialist state. Chavez is completing state control of companies in the energy and telecommunications industries, which he deems a strategic part of his socialist plan.

The announcement follows recent measures aimed at clamping down on so-called speculators. Business leaders such as Eduardo Gomez Sigala, the head of Caracas-based business panel Conindustria, said that regular shortages of meat, sugar and milk worsened this year because government-set prices imposed by Chavez almost four years ago don't allow any profit.

Economists such as Alberto Ramos of Goldman Sachs Group Inc. say that price regulations and a host of other controls, including a crackdown on businesses buying foreign exchange outside the legal, government channel, are rendering the production of a large number of foods unprofitable, leading to a decline in supply and, as a result, spurring inflation.

Venezuela's annual inflation rate rose to a two-year high in January as a depreciation of the country's currency boosted import costs. Consumer prices increased 18.4 percent in the 12 months through January, the fastest pace in Latin America.

On Tuesday, the government raised the prices it sets on food staples, such as milk and eggs, to ease hoarding that has sparked shortages. Prices on beef and chicken were also raised by the Light Industries and Commerce Ministry.

The government also eliminated the value-added tax on foods such as cheese, meat and cooking oil. Venezuela imports six of every ten goods consumed in the country.

The National Assembly's finance committee on Wednesday created a sub-committee to investigate public remarks by Luis Emilio Vegas, the president of Venezuela's Real Estate Chamber, in which he estimated an average 20 percent climb in housing prices this year, said Ricardo Sanguino, head of the committee.

"His irresponsible comments damaged the country and disturbed prices," Simon Escalona, the committee's vice president, said at a congressional meeting in Caracas. "It's not his place to say prices will rise 20 percent." Vegas said his forecast, published in the local newspapers last month, was based on analyzing supply and demand for housing and the inflation rate.

"Right now there's huge demand and little supply," Vegas said at the committee meeting. "Don't kill the messenger."

Chavez on Wednesday also reiterated his pledge to reduce the work day from eight hours and force private companies to allow employees to devote time to studying socialism at the workplace.

On Tuesday, a Venezuelan judge fined a Caracas journalist and his publisher 10-and-a-half months of salary for a 2005 editorial addressed to Rosines Chavez Rodriguez, Chavez's young daughter, El Nacional reported.

The paper, Tal Cual, is published by Teodoro Petkoff, who ran for president last year before dropping out to support opposition candidate Manuel Rosales.

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