Venezuela's Chavez nationalizes coffee producers

By FABIOLA SANCHEZ

CARACAS, Venezuela

President Hugo Chavez's government on Wednesday nationalized two coffee companies, including Fama de America, one of Venezuela's largest coffee producers.

The state-run Bolivarian News Agency said presidential decrees published in the Official Gazette ordered the government takeover of Fama de America and Cafea, which together control about 80 percent of the local coffee market.

Company executives were not immediately available to comment.

Government officials took control of some operations at Fama de America, which was founded in 1887, and Cafea earlier this year.

Chavez's government has nationalized major players in the electricity, steel and cement sectors since 2007, as well as four major oil projects.

It now says it's asserting control over coffee companies that it accuses of acting as monopolies and flouting price controls by smuggling coffee into Colombia. Government officials have said they also hope to purchase a majority stake in a third company, Cafe Madrid.

A spokesman for Cafe Madrid said the company would not immediately comment on the government plan.

Col. Carlos Osorio, an army officer in charge of food distribution, said the move will give other smaller coffee producers access to better distribution. He said the government plans to combine Fama America and Cafe Madrid into a single business with a reduced market share.

The government seized temporary control of both coffee producers in August while it investigated whether they illegally smuggled coffee out of the country to circumvent price controls. The companies denied wrongdoing.

Coffee is one of many products that fall under price controls, and Venezuelans have been facing sporadic shortages of coffee. Business leaders say the underlying problem is insufficient production.