U.S.-based food company Kellogg said on Tuesday it had pulled out of Venezuela due to its brutal economic crisis, the latest business to end operations in the oil-rich nation heaving under hyperinflation and strict price controls.
“In December of 2016, Kellogg deconsolidated its Venezuela business from the company’s results. The current economic and social deterioration in the country has now prompted the company to discontinue operations,” Kellogg said in a statement.
Kellogg did not specify what difficulties it was facing in Venezuela, but companies typically struggle to find raw materials due to product shortages and currency controls that crimp imports. Socialist President Nicolas Maduro’s government also stops companies from raising prices to keep up with hyperinflation, denting profits and sometimes rendering operations unsustainable.
Venezuela’s Information Ministry did not respond to a request for comment.
The closure is not expected to significantly worsen food shortages in Venezuela, but it was a further blow to morale for many Venezuelans as Kellogg’s is the most popular and available cereal in the country.
Stunned workers were barred from entering Kellogg’s plant in the central city of Maracay and massed outside, seeking information, local business sources said.
The move by the multinational was a typical one in Venezuela after years of economic crisis. Others, including Clorox, Kimberly-Clark, General Mills, General Motors and Harvest Natural Resources, have given up on the OPEC country, abandoning assets or selling them cheap.
Venezuela is undergoing quintuple-digit annual inflation and millions suffer food and medicine shortages. Despite the problems, Maduro is expected to win re-election on Sunday in a vote the main opposition coalition says is a sham.
Maduro blames Venezuela’s crisis on an “economic war” he says is waged by Washington, greedy businessmen and coup-mongers.
In the past, his government has taken over the factories of some companies that have left the country. In 2014, authorities took over two plants belonging to U.S. cleaning products maker Clorox Co after its departure.
“No Kellogg products or brands should be commercialized in the country without the expressed authorization of the Kellogg Company,” Kellogg said in its statement, adding it would like to return to Venezuela in the future.