Brazil plans to strengthen food stocks through updated procurement rules to address rising food inflation, a departure from previous policies. Edegar Pretto from Conab highlights the need for flexibility in purchasing mechanisms. Additionally, Brazil has cut food import tariffs, but public concerns over inflation continue, reflected in consumer price statistics.
Brazil seeks to bolster its food stocks to mitigate inflationary pressures, as stated by Edegar Pretto, head of the Brazilian crop agency Conab. The agency is proposing alterations to current procurement contract rules, which were originally established to support farmers during low-price periods. Given the current market dynamics, Pretto noted it is increasingly difficult for grain prices to meet the minimum thresholds specified under existing Conab regulations.
This strategic shift towards increasing food reserves marks a departure from earlier administrations and highlights the government’s struggles to control inflation. Discussions are ongoing to revise the current procurement guidelines in order to better adapt to the market. Pretto emphasized, “The rules serve to protect farmers’ income and not to build up stocks.” He advocated for more flexible mechanisms that enable the government to purchase grains at lower prices to avoid further price increases.
In efforts to address rising food costs, Brazil recently reduced import tariffs on specific food items, although some analysts have deemed this measure ineffective. President Luiz Inacio Lula da Silva’s popularity has dipped as citizens express mounting concern over escalating consumer prices. Reports indicate food and beverage prices rose by 8% throughout 2024, with a nearly 1% increase in January alone, marking five consecutive months of rising prices. February data is anticipated on Wednesday.
Conab requires an additional 350 million reais (approximately $60.4 million) this year to procure 445,000 metric tons of essential grains including corn, rice, and beans, as confirmed by Pretto and reported by Valor Economico. Thus far, the agency has earmarked 189 million reais for this initiative.
In conclusion, Brazil’s initiative to reinforce food stocks aims to combat rising inflation and stabilize grain prices. The intended changes to procurement rules reflect a necessary adaptation to current economic challenges. Despite some recent measures, such as tariff reductions, inflation remains a pressing concern for the Brazilian government, significantly affecting its citizenry.
Original Source: www.tradingview.com
