In Venezuela, the Newest State Business Is a Dairy

By Juan Forero
Washington Post Foreign Service
Saturday, June 7, 2008

BARQUISIMETO, Venezuela -- Mauricio Herrera describes himself as a devoted soldier in President Hugo Chávez's self-styled revolution. So when oil workers opposed to Chávez went on strike in 2002, Herrera was among loyalists at the state oil company who revived production.

Now, with the government bedeviled by food shortages, Herrera has been called upon to carry out the president's orders in an entirely different sector: milk.

A chemical engineer with 32 years of experience in oil, Herrera is working at Los Andes Dairy, which was recently acquired by the state oil company. He is responsible for running a venerable firm with two pasteurization plants, 52 distributorships and 3,000 employees. His instructions are to boost production and ease Venezuela's dairy shortages.

In a country that has seen the state increasingly inject itself into the economy, nationalizing companies, applying currency controls and setting prices, the acquisition of Los Andes in this western city embodies Chávez's state-does-it-all philosophy.

The approach has largely discouraged private investment in Venezuela, while making some foods scarce. But since Chávez first won office in 1998, he has wrested control of oil from multinational energy firms and nationalized the phone company, electric utilities and, more recently, an Argentine-controlled steel producer.

Shifting away from the production of yogurt and oatmeal -- products Herrera dismissively says the former owners churned out to generate profits -- Los Andes has ramped up milk production eightfold in a bid to achieve what the government calls "nutritional sovereignty."

"It's our responsibility," said Herrera, 57, who has a slight goatee and has learned to speak about milk with the same enthusiasm he once reserved for oil. "This is a question of conscience. This is a company that has to have a socialist focus."

Chávez announced the purchase of Los Andes in March as a solution to the food shortages that have chipped away at his government's popularity. Herrera and officials at the oil company said they did not know what the state paid for Los Andes, though milk industry officials said it was $180 million.

The president said he decided to purchase the dairy company after Rafael Ramírez, the president of Petroleos de Venezuela, the state oil company, told him about it.

"He said, 'I have good news, they're selling a company,' " Chávez said recently on his nationally televised show, "Hello President." "I reviewed the characteristics of the company, and I said, 'Let's not waste a day. Buy it.' "

Although economists blame the food shortages here in part on rising demand, the president has said unbridled capitalism, unscrupulous speculators and hoarding by political opponents are to blame. He has also characterized the struggle to increase food production as part of an epic battle between his revolution and imperialist forces.

"We're going to have good nutrition for a people who deserve it," he said. "We're going to defeat the imperialist plan."

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