Brazil’s crop agency, Conab, is changing procurement rules to build grain stocks and tackle rising food inflation. The adjustments reflect current economic challenges and a shift in policy focus. Additional financial resources will be allocated for grain purchases as food prices continue to escalate, raising concerns among consumers.
Brazil’s crop agency, Conab, is taking measures to increase grain stocks as part of its strategy to combat rising food inflation. Agency head Edegar Pretto revealed plans to modify procurement contract rules originally intended to assist farmers during low pricing periods, due to current challenges in meeting minimum pricing thresholds for grains. This initiative marks a significant policy departure from prior administrations, reflecting the government’s struggle to control inflation.
Pretto indicated that the existing regulations primarily focus on protecting farmers’ income rather than facilitating stock accumulation. He emphasized the need for more adaptable guidelines, proposing a purchasing mechanism that allows for government grain purchases at low prices to avoid further price increases. Brazil also recently reduced import tariffs on specific food items, although some experts view this measure as inadequate in addressing escalating food costs.
Concerns around inflation have notably impacted the approval ratings of President Luiz Inacio Lula da Silva, as consumer prices continue to rise. As reported by the IBGE, food and beverage prices increased by about 8% in 2024, with a nearly 1% rise in January alone, marking the fifth consecutive month of increases. Upcoming data for February will be released shortly.
Conab projects an expenditure of an additional 350 million reais ($60.4 million) to procure 445,000 metric tons of essential grains including corn, rice, and beans, corroborated by news from Valor Economico. Currently, 189 million reais has already been allocated for these purchases.
Brazil is implementing a strategy to bolster grain stocks as a response to rising food inflation, shifting from previous agricultural policies. The focus is on modifying procurement regulations to allow government purchases at low prices, reflecting urgent economic challenges. These measures are critical as food prices continue to rise, affecting public sentiment and governance.
Original Source: www.tradingview.com
