Italian dairy group Parmalat, has sold a milk processing plant to the Venezuelan government amid shortages of milk in the South American nation. Venezuelans have been scrambling for milk for several weeks and there have been inconsistent supplies this year of other basic food products, including meat, chicken and wheat flour.

Venezuela this year has suffered periodic shortages of basic food products such as milk and eggs, and recently confiscated 125 tonnes of powdered milk from a Venezuelan plant run by Switzerland’s Nestle. Parmalat on Tuesday signed an accord to sell its 1 million liter per day facility in western Venezuela to a state-owned corporation for an undisclosed sum, the company said, adding it had been in talks over the deal for two years.

Business leaders blame the situation on price controls imposed by the government of President Hugo Chavez, while government supporters say growing demand and hoarding by unscrupulous businesses have caused the supply problems. A global boom in demand has also made it difficult for the South American nation to import sufficient quantities to meet demand, according to milk industry leaders.