Brazil’s Conab Agency to Enhance Food Stocks to Address Inflation

Brazil’s crop agency Conab seeks to bolster food stocks to combat escalating food inflation. Agency head Edegar Pretto stated that current procurement rules require revision to address the rising costs. Conab aims to leverage more flexible guidelines for buying grains while also responding to the public’s growing concern over price increases, which have notably affected President Lula da Silva’s popularity.

Brazil’s crop agency, Conab, is taking steps to bolster food stocks in an effort to address rising food inflation. Agency head Edegar Pretto stated that existing procurement contract rules, which were originally designed to support farmers during low price periods, are now inadequate to meet current challenges. Given the difficulty in grain prices reaching the designated minimum thresholds, discussions are underway for updating these guidelines.

This initiative represents a significant policy shift from prior administrations, signaling the government’s struggle to control inflation. Pretto emphasized the necessity for more adaptable rules, stating, “More flexibility is required and the idea is to have a mechanism that allows the government to buy [grains] at a low price, always at a low price, so as not to make prices rise.”

Last week, the Brazilian government reduced import tariffs on certain food products to curb rising costs; however, some analysts have criticized the measure as ineffective. Concerns surrounding inflation have caused President Luiz Inacio Lula da Silva’s popularity to decline, as Brazil experiences an approximately 8% increase in food and beverage prices over 2024. As for January, there was nearly a 1% rise, marking the fifth consecutive month of price increases.

Conab plans to allocate an additional 350 million reais ($60.4 million) this year for the purchase of 445,000 metric tons of essential grains such as corn, rice, and beans. So far, 189 million reais has been earmarked for this initiative, as confirmed by Conab.

In summary, Brazil’s agricultural agency Conab is initiating measures to enhance food stock levels to combat rising inflation, a shift from former policies. By revising procurement rules, the government aims to procure grains at lower prices to mitigate inflationary effects. The continuation of food price increases poses challenges for the current administration, emphasizing the importance of effective fiscal policies in sustaining consumer stability.

Original Source: www.tradingview.com