updated 8/5/2009 6:50:52 PM ET 2009-08-05T22:50:52

Venezuelan will expropriate the country's two largest coffee processing companies, President Hugo Chavez said Wednesday.

Chavez said the government will take permanent control of the Fama de America and Cafe Madrid within three months.

The government seized temporary control of the companies' this week while it investigates whether they illegally smuggled coffee out of the country to circumvent price controls.

The companies deny wrongdoing.

Chavez said on Wednesday that "they will be in the state's hands."

Coffee is one of many products that fall under price controls, and Venezuelans have faced a scarcity of coffee in recent weeks. Business leaders say the underlying problem is insufficient production.

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