Brazil’s Conab agency plans to enhance grain stocks to combat food inflation by proposing changes to procurement contract rules. The move signals a shift in policy amid rising consumer prices and President Lula’s declining popularity. Plans include an additional 350 million reais for purchasing staple grains over the year.
Brazil’s national crop agency, Conab, is planning to enhance grain stockpiling in an effort to combat rising food inflation. Agency head Edegar Pretto emphasized the need to amend procurement contract regulations, as current rules primarily shield farmers during periods of low prices. He highlighted the difficulty for grain prices to reach the minimum thresholds stipulated under existing procurement contracts, suggesting a revision is necessary given unfolding economic challenges.
This strategic shift towards increasing food reserves marks a significant departure from previous governmental approaches, underscoring a struggle to manage inflation effectively. As discussions regarding the alteration of procurement guidelines continue, Pretto noted, “The rules serve to protect farmers’ income and not to build up stocks.”
He advocated for greater flexibility in purchasing mechanisms that would enable the government to acquire grains at lower prices, consistently preventing escalations in market rates. In tandem with these efforts, Brazil recently reduced import tariffs on specific food items, a strategy some analysts have labeled as futile in curbing food price inflation.
The rising consumer prices have adversely impacted President Luiz Inacio Lula da Silva’s popularity, with a significant 8% increase in food and beverage prices recorded for 2024, according to IBGE. January’s figures indicated a nearly 1% rise, marking the fifth month of continuous price growth, with February’s data upcoming.
Conab is projected to allocate an additional 350 million reais (approximately $60.4 million) this year for the purchase of 445,000 metric tons of staple grains, including corn, rice, and beans, with 189 million reais already earmarked for this initiative.
In summary, Brazil is taking significant steps to bolster its grain reserves to mitigate the rampant inflation affecting food prices. Changes to the existing procurement contract rules are being proposed to better accommodate current market conditions. As the government navigates public dissatisfaction stemming from rising consumer prices, these policies reflect an urgent response to economic pressures, with considerable investments planned for grain procurement.
Original Source: www.tradingview.com
