Brazil Allocates R$350 Million for Food Reserves Amid Price Surge

Brazil’s National Supply Company (CONAB) will receive R$350 million to enhance food reserves for rice, beans, and corn to address high prices and food inflation. Total funding projected for 2025 is R$539.9 million if prices drop. Legislative changes are considered to improve operational flexibility for CONAB; however, experts voice concerns over the effectiveness of stockpiling compared to direct aid programs.

The National Supply Company (CONAB) in Brazil will receive an extra R$350 million to enhance its food reserves following high price levels. CONAB President Edegar Pretto indicated that this funding could increase total financial backing for purchasing and storage to R$539.9 million in 2025, assuming prices decrease. In the previous year, approximately R$124 million had been allocated for similar activities.

The initial budget outlined in the proposed Annual Budget Bill (PLOA) is R$189.9 million and awaits Congressional approval. The initiative to strengthen food reserves aims to mitigate food inflation, as confirmed by Mr. Pretto. Funds from the Minimum Price Guarantee Program (PGPM) will likely be repurposed for this stockpiling effort.

Mr. Pretto expressed optimism regarding a potential bumper crop and falling prices, presenting an ideal opportunity to strengthen reserves and aid farmers. Additionally, Minister of Agrarian Development Paulo Teixeira has requested an additional R$1 billion for stockpiling in 2025, pending review.

CONAB is poised to procure at least 445,000 tonnes of grains this year, including rice, corn, and beans. Although the potential acquisition of wheat was mentioned, the volume remains unspecified. With emphasis from President Lula on regulatory stocks, the Ministry is expected to propose changes to enhance CONAB’s operational flexibility.

Under Brazilian law, stockpiling purchases arise only when market prices slip below designated minimums. This policy seeks to safeguard farmers’ incomes amidst price fluctuations and limits CONAB’s ability to intervene actively amid inflationary pressures. The proposal to amend these provisions is still preliminary and is under consideration within the government.

Discussions are ongoing regarding the mechanisms to achieve reserve buildup. Mr. Pretto stated, “Every action we take goes through discussions within the government. We are evaluating the possibilities.” A government official highlighted the current restrictions, confirming that purchases through the market are permitted only under specific conditions to prevent exacerbating price increases.

CONAB aims to utilize public sale option contracts, which offer premiums above the minimum price to encourage selling to the state corporation. This method previously facilitated the procurement of 91,000 tonnes of rice last year. Furthermore, specific legislation allows for corn purchases under the Direct Sale Program (ProVB), enabling transactions even when market prices exceed minimum thresholds.

Future efforts may expand the range of products under this program, including potential offerings of soybean meal, cottonseed, and sorghum. Recently, amid political considerations, Vice President Geraldo Alckmin assured that CONAB would receive necessary funding to bolster its storage operations, contingent upon price declines.

However, expert thoughts vary on stockpiling strategies. Guilherme Bastos from the Getulio Vargas Foundation advised that funds would be more effectively utilized for income transfer or food distribution initiatives. Contrarily, Mr. Pretto defended stockpiling as essential for food sovereignty and national security, stating, “Maintaining reserves of these products is a matter of food sovereignty and national security.”

In summary, Brazil’s CONAB is set to receive an additional R$350 million to enhance food stockpiling amid high prices. The initiative aims to buffer food inflation and improve support for farmers. Legislative changes are being discussed to allow more operational flexibility for CONAB, although current laws restrict intervention measures. Experts remain divided on the efficacy of stockpiling versus alternative food security measures, with some advocating for increased funding in social programs instead.

Original Source: valorinternational.globo.com

About Allegra Nguyen

Allegra Nguyen is an accomplished journalist with over a decade of experience reporting for leading news outlets. She began her career covering local politics and quickly expanded her expertise to international affairs. Allegra has a keen eye for investigative reporting and has received numerous accolades for her dedication to uncovering the truth. With a master's degree in Journalism from Columbia University, she blends rigorous research with compelling storytelling to engage her audience.

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