Brazil aims to boost food stocks in bid to fight inflation

Brazilian crop agency Conab, which plans to build up grain stocks in a bid to rein in rising food inflation, is seeking to change rules governing procurement contracts, agency head Edegar Pretto said yesterday.

The current rules were designed to help farmers when prices are low but the government faces new challenges, Pretto said in a statement to Reuters. These days it is “quite difficult” for grain prices to hit the minimum threshold required by rules of Conab grain procurement contracts, he added.

Boosting food stocks marks a policy shift from previous administrations and indicates the government is struggling to keep inflation in check.

Discussions are taking place to update the current guidelines, Pretto said.

“The rules serve to protect farmers’ income and not to build up stocks,” he said.

“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, Brazil slashed import tariffs on certain foodstuffs to bring down rising food prices, a measure which some analysts called ineffective.

The popularity of President Luiz Inacio Lula da Silva has plunged as Brazilians are increasingly worried about creeping consumer prices.

Food and beverage prices rose around 8% in 2024 as a whole, according to statistics agency IBGE, and in January were up by nearly 1%, marking a fifth consecutive month of increase. February data will be released Wednesday.

Conab could use an additional 350 million reais ($60.4 million) this year to buy 445,000 metric tons of grains such as corn, rice and beans, Pretto said, confirming a report by newspaper Valor Economico.

Some 189 million reais has already been set aside for that purpose, Conab said.

Tags: grain, Brazil, stocks