Venezuela

The government of maverick president Hugo Chavez has announced the nationalization of two domestic coffee companies, Fama de America and Cafea, according to the state-run Bolivarian News Agency. A presidential decree ordered the government takeover of the two companies which between them control around 80% of the country’s domestic coffee market. The government is also looking to buy a controling stake in a third company, Cafe Madrid.

The government claims that the companies have acted as a monopoly, avoiding price controls by smuggling coffee into neighboring Colombia.

The government had previously taken control of both companies temporarily in August during its ongoing investigation into coffee smuggling charges. Both companies deny any involvement in illegal activities.

Despite claims by the government that smaller coffee producers will gain acess to better domestic distribution, it remains unclear how the move will affect Venezuelan coffee exports. Coffee is one of many agricultural products whose price is controlled by the government and there have been shortages in the past. Analysts believe that the fundamental issue is one of insufficient production.