Mr Chavez has accused rice producers of sidestepping quotas

Venezuelan President Hugo Chavez has ordered the expropriation of a rice mill, amid a battle with food companies over price regulation.

Mr Chavez said the mill, owned by a subsidiary of US food giant Cargill, was not distributing rice at government-set prices.

He also threatened to nationalise the country's largest food processor and private company, Polar.

Venezuela has already set quotas and prices for 12 basic foods.

Under the measure, 80% of all rice produced must be basic white rice. 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.

'Intolerable'

Last week President Chavez ordered troops to rice processing plants after accusing producers of sidestepping the law on controlled prices by producing a higher grade of rice.

Cargill, which operates one rice-processing plant in Venezuela, said the mill does not produce the plain rice that is under regulation.

"Prepare the decree, we are going to expropriate Cargill. We are not going to tolerate this," Mr Chavez said.

Mr Chavez is attempting to reduce the cost of the basic shopping basket of ordinary Venezuelans at a time of soaring inflation, says the BBC's Will Grant in Caracas.

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

The move against Cargill is unlikely to be viewed favourably in Washington either, which angered Venezuela last month by criticising its human rights record, our correspondent adds.



