Brazil Allocates R$350 Million to Strengthen Food Reserves Against Inflation

The Brazilian government will allocate R$350 million to CONAB for regulatory stockpiling of food items like rice and corn. This aims to combat rising food prices while protecting farmers. Pending legislative reforms may enhance CONAB’s operational capabilities. Discussions on the proposal are ongoing, indicating government intent to strengthen food reserves amid inflation.

The Brazilian government is set to allocate an additional R$350 million to the National Supply Company (CONAB) to enhance food reserves amidst soaring prices. According to CONAB President Edegar Pretto, this funding could elevate the total budget for purchasing and storing essential crops to R$539.9 million in 2025, contingent upon a decline in market prices. Meanwhile, for 2024, approximately R$124 million has already been designated for this purpose.

The proposed budget for stockpiling, as outlined in the Annual Budget Bill (PLOA), awaits Congressional approval and currently stands at R$189.9 million. The government’s recent announcement to increase reserves is part of a broader strategy to address food inflation effectively. Funding intended for the Minimum Price Guarantee Program (PGPM) may be redirected to support this initiative.

Mr. Pretto expressed optimism about upcoming harvests and indicated that prices for some products could decrease, presenting a strategic opportunity to enhance reserves and mitigate potential losses for farmers. Minister of Agrarian Development Paulo Teixeira has requested R$1 billion for stockpiling in 2025, with a target of acquiring 1.2 million tonnes of grains.

This year, CONAB plans to procure at least 445,000 tonnes of essential crops, including rice, beans, and corn. Although Mr. Pretto mentioned the potential acquisition of wheat, he did not disclose specific figures. With President Lula urging for an expansion of regulatory stocks, the Ministry of Agrarian Development is contemplating legislative reforms to augment CONAB’s functionality in the market during price surges.

Brazilian law permits stockpiling purchases exclusively when market prices dip below the minimum threshold set for the current harvest. This policy aims to safeguard farmers’ incomes rather than directly curb consumer prices during periods of inflation, which restricts CONAB’s ability to intervene effectively.

The current proposal is being discussed among various governmental bodies, including the Ministries of Agriculture and Finance, and the Chief of Staff Office. Mr. Pretto emphasized that each action is derived from intergovernmental discussions aimed at establishing reserves through necessary mechanisms.

In summary, Brazil’s government is poised to increase funding for CONAB to enhance food reserves in response to high prices. The additional R$350 million may support a strategic plan to stockpile key crops while protecting farmers from losses. Pending legislative discussions indicate a desire to improve market interventions, ensuring food sovereignty and addressing food inflation effectively.

Original Source: valorinternational.globo.com