May 19/BMI Americas Food and Drink Insights -- The Venezuelan government of Hugo Chavez has seized control of a pasta factory owned by Cargill following a dispute over prices. Deputy food minister Rafael Coronado says the company was not producing enough of a type of pasta sold at cheap, government-controlled prices and suggested there had been a "clear transgression of the law." Coronado has said that the seizure will be for 90 days, but that after this period the government could decide to take further action against the firm. In May 2009, Cargill was forced to hand over a rice processing plant under similar circumstances, and Business Monitor International Ltd. (BMI) thinks that Venezuela's current food policies mean the newly occupied plant is likely to remain under government control indefinitely.
Cargill entered Venezuela in 1986 through the acquisition of Agroindustrial MiMesa (a pasta and flour business) in Maracaibo. Over the last 23 years the business has expanded, and the division now has 2,000 employees spread across 22 locations, including 13 factories. The firm produces branded products, as well as product ingredients, and distributes them across the country through its own distribution network. However, this business, which BMI estimates generates between $1 billion to $2 billion a year and accounts for around 2% of Cargill's total turnover, now looks increasingly under threat.