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Venezuela takes control of 2 coffee plants

Venezuela takes control of 2 coffee plants

President Hugo Chavez's government seized control of two of Venezuela's largest coffee processing plants on Monday, threatening to expropriate them if investigations reveal they have illegally smuggled coffee out of the country.
Commerce Minister Eduardo Saman said it was a temporary seizure while officials investigate whether two companies, Fama de America and Madrid, illegally circumvented price controls.
If investigations reveal violations, he said, officials will "propose the expropriation" of the plants.
"In that case, the workers would take control of the business," Saman told state television, saying that authorities would occupy the plants for three months during the investigations.
Venezuelans have faced a scarcity of coffee in recent weeks, and Saman said authorities will investigate whether the companies have engaged in "monopolistic practices" or smuggled coffee out of the country.
Coffee is one of many basic products that fall under price controls.
Saman suggested the coffee processors provoked the scarcity by not buying beans from farmers. "The lack of coffee buying has stimulated this sensation of scarcity," he said, adding that the government is taking control of the plants to ensure coffee is processed and distributed.
Both companies issued statements denying any wrongdoing, saying that government officials supervise and audit all of their purchases from local growers.
"Our company has never been involved in the illegal smuggling of coffee," Fama de America said.
Marcelo y Rivero C.A., which owns Cafe Madrid, similarly said it "never has and never will be involved in smuggling, hoarding or acquiring excess coffee."
Nelson Moreno, president of Venezuelan Coffee Industry, a local trade group, also denied that companies have been hoarding or smuggling their products into neighboring countries.
"If they revise and audit sales and the entire commercial chain, they'll realize the industry has nothing to hide," Moreno told Union Radio.
"There's a problem of insufficient agricultural production," Moreno said. "Domestic consumption is higher than production, and nobody wants to accept this reality."
Agriculture Minister Elias Jaua said the two companies have sufficient inventory to guarantee a steady supply to the Venezuelan market.
In spite of price controls on many foods, Venezuela has struggled with annual inflation that stood at 26 percent at the end of June.
The government has sought to enforce price controls while expanding the state's role in the economy as part of Chavez's drive toward socialism.