Nestle plays down alleged Chavez plant threat

By Neil Merrett

- Last updated on GMT

Related tags Nestlé

Nestle says it has received no official notice from the Venezuelan
Government that its dairy plants in the country may be seized over
accusations that both itself and rival European producers are
muscling out local players from the industry.

The comments follow reports in various news outlets claiming Venezuelan president Hugo Chavez used his weekly TV show to criticise dairy giants like Parmalat and Nestle for compounding the country's milk supply issues.

Group spokesperson Francois-Xavier Perroud told that the company refused to comment on news reports concerning the dispute.

He claimed though that the presence of groups like Nestle in markets like Venezuela served to benefit local dairy farming and milk production.

A number of dairy players like Danone, Fonterra and Nestle have increasingly sought to expand their presence in often-lucrative emerging markets of Asia and Latin America to boost their profitability.

In turning his attention to dairy multinationals, Chavez's comments could reflect further possible difficulties for the industry in the country, as a global commodities crunch for milk puts further pressure on processors' margins.

Xavier Perroud claims that in the case of Nestle, the development of targeting emerging markets has been positive for national dairy industries around the world.

"Nestle is well known for significantly helping local milk production," he said.

"The company has for a long time offered advice to farmers on improving their operations and other techniques like herd protection."

However, according to UK newspaper the Financial Times, Chavez is concerned that the presence and high output of producers like Nestle is serving to deplete the minimal stocks of milk available for the state and other national cooperatives.

The country has been involved in longstanding problems regarding meeting food demand with milk in particular proving to be scarce in the country.

Last year, record prices for staple foods around the world were attributed to about a 10 per cent rise in cost inflation, according to the UN food and agriculture organization (FAO).

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