Hugo Chavez Spearheads Raids as Food Prices Skyrocket

CNBC (Link) - Reuters (June 18, 2010)

Mountains of rotting food found at a government warehouse, soaring prices and soldiers raiding wholesalers accused of hoarding: Food supply is the latest battle in President Hugo Chavez�s socialist revolution.

Venezuelan army soldiers swept through the working class, pro-Chavez neighborhood of Catia in Caracas last week, seizing 120 tons of rice along with coffee and powdered milk that officials said was to be sold above regulated prices.

�The battle for food is a matter of national security,� said a red-shirted official from the Food Ministry, resting his arm on a pallet laden with bags of coffee.

It is also the latest issue to divide the Latin American country where Chavez has nationalized a wide swathe of the economy, he says to reverse years of exploitation of the poor.

Chavez supporters are grateful for a network of cheap state-run supermarkets and they say the raids will slow massive inflation.

Critics accuse him of steering the country toward a communist dictatorship and say he is destroying the private sector.

They point to 80,000 tons of rotting food found in warehouses belonging to the government as evidence the state is a poor and corrupt administrator.

Jose Guzman, an assistant manager at a store raided in Catia, watched with resignation as government agents pored over the company�s accounts and computers after the food ministry official and the television cameras left.

�The government is pushing this type of establishment toward bankruptcy,� said Guzman, who linked the raid to the rotten food scandal. �Somehow they have to replace all the food that was lost, and this is the most expeditious way.�

Wasted Food

Much of the wasted food, including powdered milk and meat, was found last month in the buildup to legislative elections in September. The scandal is humiliating for Chavez, who accuses wealthy elites of fueling inflation and causing shortages of products such as meat, sugar and milk by hoarding food.

�They are not going to stop us in the plan, which is to give the people what is their right,� Chavez said Friday during the inauguration of a supermarket chain the government bought this year from French retailer Casino.

Food prices are up 41 percent in the last 12 months during a deep recession, government figures show, despite the government�s growing network of state-run supermarkets that sell at discounts of up to 40 percent and are popular with his poor supporters.

South America�s top oil exporter, Venezuela imports about 70 percent of its food and analysts say the economic hardships could give the opposition a boost at the ballot box�although most expect Chavez to retain a reduced parliamentary majority.

Fighting back, Chavez says he is in an economic war against the �parasitic bourgeoisie�      that tries to convince Venezuelans that socialism does not work by twisting facts and taking advantage of honest mistakes.

�They know where we are headed, we are going to take from the Venezuela bourgeoisie the hegemony of dominance in this country,� Chavez, who calls himself a Marxist, said to applause from supporters on his TV show on Sunday.

He has also revived threats to take over the country�s largest private food processor, miller and brewer, Polar.

The president rushed to give public support to Oil Minister Rafael Ramirez, who as the boss of PDVSA is also responsible for food unit PDVAL, over the case of the rotting food.

Two former PDVAL managers have been jailed in the scandal, but that has not stifled opposition charges of government incompetence.

A string of expropriations and buyouts of companies during the last couple of years means the government now controls between 20 percent and 30 percent of the distribution of staple foods.

�We are bringing order to prices,� Trade Minister Richard Canan told Reuters during the Catia raid. �There are traders who are taking these products to the black market ... That is a crime and our government will continue to target these stores.�