Chavez boosts food price controls

By Will Grant
BBC News, Caracas

Inspections of privately owned plants have been taking place

Venezuela has set quotas for 12 basic foods which are to be produced at the government's controlled prices.

Ninety per cent of all milk production and 80% of all rice harvested in Venezuela are among the items included in the measure.

Last week President Hugo Chavez ordered troops to rice processing plants after accusing producers of sidestepping the law on controlled prices.

The food companies say the controlled prices will bankrupt them.

When President Chavez ordered troops into the country's rice fields last week, several of the food producers affected complained that the decision was unlawful.

One of them, Polar Foods, said that they were not subject to any law which stated they had to produce a certain quantity of rice at the government's fixed prices.

However, they are now.

Hugo Chavez is strangling the economy José Manuel González, Venezuelan Chambers of Commerce Venezuelan row over food seizure

The Venezuelan government has established minimum limits on 12 basic foods which must be sold at the regulated prices.

Under the measure 80% of all rice produced must be the basic white rice which makes up the staple diet of many Venezuelans.

The measure also includes 95% of all cooking oil, coffee and sugar.

Producers of items such as powdered milk, cheese and tomato sauce are also affected.

Shopping basket

The government argues that the measure is intended to stop food companies from evading the law, for example, by selling mostly enriched rice to sidestep price controls.

It also aims to reduce the cost of the basic shopping basket of ordinary Venezuelans.

But business leaders and food producers are furious at what they see as a further attack on their ability to turn a profit.

They say that the regulated prices do not take Venezuela's high inflation into account, and are forcing them to produce at a loss.

On Monday, the head of the Venezuelan Chambers of Commerce, José Manuel González, robustly criticised the government of Hugo Chavez for, as he put it, strangling the economy.