Brazil is set to allocate an additional R$350 million to strengthen regulatory stocks of rice, beans, and corn through CONAB, aiming to mitigate food inflation and support farmers. This budget supplement could raise total funding for 2025 to R$539.9 million if prices stabilize. While there are calls for operational flexibility within CONAB, concerns about the efficiency of stockpiling funds remain prevalent.
The Brazilian government plans to allocate an additional R$350 million to the National Supply Company (CONAB) in this year’s budget to enhance its regulatory stocks of essential grains such as rice, beans, and corn. According to CONAB President Edegar Pretto, this allocation may raise total funding for purchasing and storing these products in 2025 to R$539.9 million, depending on market prices. Last year, CONAB allocated approximately R$124 million for similar purposes.
The initial funding set forth in the Annual Budget Bill (PLOA), currently awaiting congressional approval, stands at R$189.9 million. The federal government introduced this strategy to strengthen reserves to help mitigate food inflation. Funds initially intended for the Minimum Price Guarantee Program (PGPM) are expected to be reallocated to achieve these goals. Mr. Pretto stated that they anticipate a bumper crop, presenting a favorable opportunity for building reserves and assisting farmers.
Minister of Agrarian Development Paulo Teixeira has sought an additional R$1 billion for stockpiling in 2025, which is still under review as he aims to acquire up to 1.2 million tonnes of grains this coming year. CONAB aims to procure at least 445,000 tonnes this year, including 200,000 tonnes each of rice and corn, along with 45,000 tonnes of beans. While there are plans to acquire wheat, details regarding the quantity remain undisclosed.
With President Lula’s directive for bolstering regulatory stocks, the Ministry of Agrarian Development is anticipated to propose modifications to enhance CONAB’s operational flexibility. However, Mr. Teixeira emphasized the necessity of ensuring that any market interventions during high prices do not exacerbate agricultural cost inflation. Brazilian legislation mandates that stockpiling can only occur when market prices fall below minimum price thresholds established for the current harvest, limiting CONAB’s ability to intervene during food inflation.
The proposal supporting these changes is still in its preliminary stages, being deliberated in Brasília, and involves collaboration among the ministries of Agriculture and Finance as well as the Chief of Staff Office. Mr. Pretto noted, “Every action we take goes through discussions within the government. We are evaluating the possibilities.”
Currently, CONAB intends to commence public sale option contracts offering premiums of up to 20% above minimum prices to stockpile rice and beans. This strategy has previously resulted in the acquisition of 91,000 tonnes of rice when farmers opted to sell to the state company at the end of the harvest. Mr. Pretto indicated that the 20% premium, authorized by a resolution from the National Monetary Council (CMN), is enhancing the purchasing options available to the organization.
CONAB operates under specific legislation through the Direct Sale Program (ProVB), which permits purchases even when prices exceed minimum benchmarks. This initiative is aimed at supporting small-scale livestock producers in underserved areas. Mr. Pretto expressed intentions to broaden the product assortment available through this program, potentially including soybean meal, cottonseed, and sorghum.
In efforts to lower food prices and boost President Lula’s approval ratings, Vice President Geraldo Alckmin assured that CONAB would receive the requisite funding for public storage, but only after prices stabilize. Mr. Pretto affirmed that there are indications of increased funding for stockpiling, a continual request from the organization, although specific figures remain undisclosed.
Guilherme Bastos from the Getulio Vargas Foundation (FGV Agro) contended that funds intended for stockpiling might be more effectively utilized in income transfer or food distribution programs. Caution was also expressed by a former agricultural policy secretary who suggested that buying at high prices poses inherent risks. Despite the opposition, Mr. Pretto argued that maintaining reserves is vital for food sovereignty and national security.
In conclusion, Brazil’s strategic investment of R$350 million into CONAB’s food reserves aims to address the ongoing challenge of food inflation while aiding farmers through increased purchasing power of essential grains. Regulatory measures and potential legislative adjustments are on the table to enhance CONAB’s operations, although critiques on the efficacy of stockpiling funds persist. The ongoing dialogue among government officials indicates a meticulous approach to balance market stability with agricultural support.
Original Source: valorinternational.globo.com
