Brazil will allocate an additional R$350 million to improve food reserves, totaling R$539.9 million by 2025 if prices drop. Funding will support rice, beans, and corn purchases to combat inflation. Legislative changes for CONAB’s operational flexibility are anticipated, while criticisms suggest alternative funding uses.
Brazil plans to invest an additional R$350 million in food reserves primarily for rice, beans, and corn, as per CONAB President Edegar Pretto. Total funding for these stockpiling efforts could rise to R$539.9 million in 2025 if market prices decrease. In contrast, the 2024 allocation was around R$124 million, with the pending Annual Budget Bill proposing R$189.9 million for this year.
The government aims to strengthen food reserves to combat food inflation, redirecting funds from the Minimum Price Guarantee Program (PGPM). Pretto expressed optimism about a bumper crop leading to drops in some product prices, enabling reserves accumulation while minimizing farmer losses. Agrarian Development Minister Paulo Teixeira has requested an extra R$1 billion for 2025 reserves.
This year, CONAB targets purchasing at least 445,000 tonnes, including significant amounts of rice and corn. There are also considerations for wheat acquisitions, though specifics remain undisclosed. President Lula emphasizes increasing regulatory stocks; thus, legislative changes may be necessary to enhance CONAB’s flexibility in market responses without inflating agricultural prices.
Under Brazilian law, stockpiling is restricted to when market prices are lower than the minimum set for the current harvest, protecting farmer incomes but limiting CONAB’s ability to stabilize consumer prices. Discussions involve various ministries to refine procurement strategies.
Currently, CONAB plans to utilize public sale option contracts, offering premiums for selling rice and beans, a strategy that previously secured deals for 91,000 tonnes. Additionally, the Direct Sale Program (ProVB) allows purchasing corn above minimum prices to support small-scale livestock producers. Expansion of this program may include other products like soybean meal and cottonseed.
Despite efforts to control food prices, some argue that funds would be better allocated to income transfer or food distribution programs. Critics maintain that purchasing at high prices could exacerbate inflationary pressures, yet Pretto counters that maintaining reserves is essential for food sovereignty and national security.
Brazil is strategically increasing its investment in food reserves to fight inflation and support farmers, aiming to adapt its purchasing strategies while complying with existing regulations. The proposed budget and legislative changes signal the government’s commitment to enhancing food security, although differing opinions suggest alternative uses for these funds. The outcome of these initiatives will potentially enhance CONAB’s operational effectiveness while targeting market stabilization during fluctuating agricultural prices.
Original Source: valorinternational.globo.com
