Venezuela seizes Smurfit Kappa plot of land

THE Venezuelan government has seized a €500,000 1,500-hectare (3,707 acres) plot of land owned by Smurfit Kappa Group.

While that represents 5% of the Irish packaging group’s land in the country, the raid has raised uncertainty about the group’s future and its shares closed down 8.8%, a drop of 12 cent to €1.18 per share.

Goodbody Stockbrokers yesterday seemed to play down the eucalyptus farm seizure incident.

In a note to investors analyst Robert Eason said Smurfit Kappa owns around 30,000 hectares of land in Venezuela and “this represents a very small seizure”.

Asked if the raid had long-term implications for the group, a spokesman in Dublin said: “We don’t know” and said that all queries should be made to the Venezuelan authorities.

In a brief statement issued to the London and Dublin stock exchanges the group confirmed that “approximately 1,500 hectares of forestry land with a value of approximately €500,000” had been seized.

“Our Venezuelan management are in discussions with the local authorities,” it said.

No further details were forthcoming from the company last night.

Smurfit, Europe’s largest maker of cardboard boxes, was using the land to grow eucalyptus trees, and the government will plant more rational crops like yucca and beans, president Hugo Chavez said in an address on state television on Thursday. Since winning a referendum to abolish term limits on his presidency on February 15, Mr Chavez, 54, has expropriated a rice processing plant owned by Minnesota-based Cargill, and threatened to take over the South American country’s largest privately owned company, Empresas Polar, for evading price controls.

“This eucalyptus crop sucks all of the water from the subsoil,” Mr Chavez said. “The rivers are drying up.”

Venezuela has seized large plots of land during Chavez’s 10-year rule in a bid to redistribute them to small farmers and co-operatives.

In terms of the overall group, Latin America represents 15% of the group’s sales and 18% of group earnings before tax and other deductions. It accounts for 25% of Latin American profits.

Additional reporting by Bloomberg