31 de octubre de 2020
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Hispanic World

Food prices skyrocket in Brazil exhausted by Covid-19 crisis

By Alba Santandreu

By Alba Santandreu

Sao Paulo, Sep 9 (efe-epa).- The price of basic foodstuffs has skyrocketed in Brazil, pressured higher by the heavy increase in demand for the country's foodstuffs in the foreign market and the climbing value of the US dollar, a rise that mainly hits the pocketbooks of the least affluent classes, who have also been hardest hit by the coronavirus pandemic.

The prices of rice and beans, two of the main staples in the Brazilian diet, have jumped by more than 20 percent so far this year at a time when the country is facing a serious economic and social crisis due to the virus.

The increase in food prices has been responsible for 80 percent of the accumulated inflation so far this year in Brazil, which so far this year totals 0.7 percent, according to figures released Wednesday by the state-run Brazilian Geography and Statistics Institute (IBGE).

The value of prime materials also jumped at the start of the pandemic in accord with the law of supply and demand. The health crisis has resulted in a sharp increase in foreign buying, while some countries opted to restrict supply to guarantee internal availability.

But in Brazil, another key factor came into the mix: the devaluation of the real. The depreciation in the Brazilian currency so far has been about 40 percent and this has attracted buyers and driven agricultural producers to rely on exports, all to the detriment of domestic sales.

"The rise in the dollar made exporters of rice, soybeans, meats, coffee (and) sugar start to have a very big advantage selling abroad in terms of prices and they began to charge a higher price domestically. They destined for export a larger share, reducing domestic supply," Mauro Rochlin, an economist with the Getulio Vargas Foundation (FGV), told EFE.

In the case of rice, the sharp drop in the value of the real made imports of the product impractical by Mercosue, the regional trade bloc made up of Brazil, Argentina, Paraguay and Uruguay.

To that can be added the contraction in the supply of rice by producers, despite the fact that the harvest is now under way, with 58 percent of the crop taken in so far, according to the Brazilian Rice Industry Association (Abirroz).

The Brazilian government has ruled out the possibility of a supply shortage in the domestic market and is confident that there will be a "super-harvest" next year, when production of 12 million tons of rice, an increase of 7.2 percent over the previous year, is anticipated.

According to the Agriculture Ministry, the next harvest, which will begin to be marketed in March 2021, will produce some alleviation in the price of rice, which the average Brazilian eats 34 kilograms (75 pounds) of each year.

But experts believe that the drop in the price will be tough to deal with as long as the dollar continues to sit at historic levels in Brazil, especially because the government is not in circumstances to control a volatile exchange rate.

The government has also refused to intervene in any way in food prices, but President Jair Bolsonaro, elected in 2018 on a liberal economic platform, has appealed to supermarket owners to reduce their profit margins to the max out of a sense of "patriotism."

In recent weeks, Bolsonaro on various occasions has discussed the price situation and has promised to take measures to reduce the rise at a time when unemployment stands at 13.3 percent, meaning that 12.8 million people are currently out of work and seeking employment.

The country is resisting the effects of the social isolation measures imposed to contain the pandemic, which so far has resulted in 4.1 million confirmed coronavirus cases and 127,000 deaths, and the government has tried to ameliorate the crisis by issuing subsidies to the poorest citizens.

Last week, Bolsonaro announced that he will postpone until the end of the year any help for informal workers and the unemployed, although he also reduced the amount of subsidies being provided to 300 reais (about $53).

The measure - which so far has benefited some 65 million Brazilians and increased the visibility of the government in the northeast, the historical bastion of the opposition Workers Party (PT) - has been a key element in increasing the president's popularity rating, which now stands at its highest level since the start of his term.

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