Venezuela Considers Nationalizing Food Companies

October 12/Caracas, Venezuela/Global Insight -- Carlos Osorio, the minister of Food, said that Venezuela's biggest food companies, such as Polar and U.S. Cargill, should be in the hands of the state to guarantee the country's "agro alimentary sovereignty." Osorio referred to the recent case of Agroislena as a path to follow and stressed that recent nationalizations were the result of the struggle between socialism and capitalism. Osorio explained that the private sector should not operate companies in the food sector.

Significance: It is not yet clear if the government is finally going to attempt to nationalize Polar and Cargill, Venezuela's two biggest food producers. There have long been claims and threats by the government to do so, and the delay in conducting such a move evidences the fact that the scale, outsourcing and decentralized organization and logistics under which these companies operate is not compatible with the current state-owned food companies' operative and supply chain model.

The government fears that if it fails to successfully operate these companies once nationalized, food scarcity could result leading to political destabilization. So far, the government has struggled to deal with food scarcity, and Chavez's strategy of nationalizing land and targeting the agro-industrial sector has significantly worsened the food supply, increasing dependence on food imports from abroad, putting upwards pressure on food prices and inflation. Despite this, it is likely that more nationalizations will continue hitting companies in the food sector, as Chavez will continue trying to build a state-owned food industry to provide cheap food in exchange for political support. 

From the October 18, 2010, Prepared Foods E-dition