Chavez Threatens to Nationalize Milk Farms Unless Owners Refuse to Sell Domestically

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President Hugo Chavez threatened on Sunday to take over farms or milk plants if owners refuse to sell their milk for domestic consumption and instead seek higher profits abroad or from cheese-makers.

With the country recently facing milk shortages, Chavez said "it's treason" if farmers deny milk to Venezuelans while selling it across the border in Colombia or for gourmet cheeses.

"In that case the farm must be expropriated," Chavez said, adding that the government could also take over milk plants and properties of beef producers.

"I'm putting you on alert," Chavez said. "If there's a producer that refuses to sell the product ... and sells it at a higher price abroad ... ministers, find me the proof so it can be expropriated."

Addressing his Cabinet, he said: "If the army must be brought in, you bring in the army."

Chavez issued the warning on his weekly broadcast program "Hello President" after announcing a hike in milk prices, a measure intended to counter recent shortages.

Sporadic shortages of some basic goods such as milk and chicken have been considered a political liability for Chavez since he lost a vote last month on constitutional changes that would have let him run for re-election indefinitely.

Chavez said the price for raw milk paid to farmers would be raised 36 percent, to about $2.80 a gallon. He urged farmers to sell their milk to a new state-run plant that he toured in the western state of Zulia.

The plant in the town of Machiques was bought last year from Italy's Parmalat SpA. Chavez said it cost some $3.7 million and is being relaunched as a "socialist business" by the state.

Chavez's government said last month that also it plans to loosen price controls on a variety of basic foods to help stem shortages. Chavez noted that demand for milk has climbed abruptly in Venezuela while supply has not kept pace.

Government critics blame price controls and other policies that they say discourage investment in agriculture.

The oil-producing country imports most of its food. But Chavez pledged to help Venezuela boost its agricultural output in the coming years.

"We're going to turn Venezuela into a food-producing power," said Chavez, who says he is leading Venezuela toward "21st century socialism."

His comments came a day after he threatened to take control of banks that fail to meet state-imposed requirements to set aside nearly a third of all loans for agriculture, mortgages and small businesses at favorable rates.