CARACAS, Venezuela - President Hugo Chavez threatened on Saturday to take control of banks that fail to meet state-imposed loaning requirements designed to benefit Venezuela's farmers.

Chavez, who says he is leading Venezuela toward "21st century socialism," accused many private banks of neglecting laws requiring them to set aside nearly a third of all loans for agriculture, mortgages and small businesses at favorable rates.

"The law must be applied," Chavez said during a televised meeting with farmers. Any bank that doesn't comply with these lending requirements "should be seized."

Chavez — a close ally of Cuban leader Fidel Castro — also announced that his government approved new legislation establishing a maximum interest rate of 15 percent on agriculture-related loans and extending payment deadlines for such credit from three to 20 years.

The Venezuelan leader's warnings come amid fluctuating food shortages and rising inflation, which reached 22.5 percent in 2007 — the highest official rate in Latin America.

Chavez's critics blame the shortages on government-imposed price controls, which were established in 2003 as a means of fighting rising consumer prices.

Food staples covered by the controls — sugar, cooking oil, bread, milk, black beans, eggs, beef and chicken — are sporadically hard to find in supermarkets, and many retailers predict the shortages are likely to persist as long as the price controls remain in place.

Government officials have attributed the shortages to greed among retailers, accusing them of hoarding products for months to later sell them at inflated prices.

During Saturday's meeting, Chavez said that "contraband" — illegal exports to neighboring countries — was partly to blame for the shortages.

Many foods fetch much higher prices in neighboring Colombia and the Caribbean, which has driven some businesses to sidestep customs requirements and smuggle goods over the border, Chavez said.

"This is a problem that we must remedy," he said. "If the National Guard isn't enough to patrol our border, I'll have to deploy the entire army along the highways and byways to stop the contraband."