Brazil Allocates Additional R$350 Million for Food Stockpiling…

Brazilian authorities plan to invest an additional R$350 million in CONAB to enhance food reserves, primarily for rice, beans, and corn, as a part of a strategy to combat food inflation. This funding may elevate the total for storage to R$539.9 million in 2025. Legislative changes are being discussed to expand CONAB’s operational capabilities, responding to anticipated market conditions and crop yields.

Brazil’s National Supply Company (CONAB) is set to receive an additional R$350 million to enhance its food stockpiling efforts, including rice, beans, and corn, as articulated by CONAB President Edegar Pretto. This allocation could elevate the agency’s total funding for storage and purchases to R$539.9 million in 2025, contingent on declining prices. The initial budget for stockpiling was approximately R$189.9 million and is awaiting Congressional approval as part of this year’s Annual Budget Bill (PLOA).

The intention to strengthen food reserves comes as part of the federal government’s strategy to mitigate food inflation in Brazil. Funds from the Minimum Price Guarantee Program (PGPM) are expected to be reallocating to support these stockpiling initiatives. Mr. Pretto highlighted that a substantial crop yield is anticipated, which will enable the country to bolster its reserves while simultaneously assisting farmers in minimizing potential losses.

Minister of Agrarian Development, Paulo Teixeira, has advocated for an additional R$1 billion for stockpiling purposes in 2025, though this proposal is still under consideration. The objective is to acquire a total of 1.2 million tonnes of grains, with CONAB aiming to purchase at least 445,000 tonnes this year, including significant quantities of rice and corn. The plan may also include the procurement of wheat, although specifics remain undisclosed.

As President Lula emphasizes the importance of increasing regulatory stocks, legislative changes are anticipated to enhance CONAB’s operational flexibility. However, any such proposals must ensure that market intervention does not inadvertently escalate agricultural costs. Brazilian legislation currently restricts stockpiling actions to instances when market prices dip below established minimum thresholds to safeguard farmers’ incomes.

The discussions regarding this proposal involve various governmental sectors, including Agriculture and Finance Ministries. Mr. Pretto remarked that discussions are ongoing within the government to evaluate viable mechanisms for enhancing reserves. Moreover, the current legislation permits only the use of option contracts for market engagement and does not allow intervention during high-price scenarios.

In response to these challenges, CONAB has indicated plans to issue public sale option contracts to procure rice and beans, offering premiums of up to 20% over the minimum price. This strategy was successfully preliminarily implemented last year. Furthermore, corn purchasing can occur under the Direct Sale Program (ProVB), allowing for procurement even when prices exceed minimum levels to support small-scale livestock producers.

CONAB also seeks to broaden the range of products supported under this program and has discussed potentially adding soybeans, cottonseed, and sorghum to its offerings. Vice President Geraldo Alckmin underscored that necessary funding for public storage would be allocated after prices stabilize. Meanwhile, Mr. Pretto suggested there would likely be increased funding for stockpiling, aligning with ongoing discussions at high governmental levels.

Critics such as Guilherme Bastos from the Getulio Vargas Foundation argue that funds devoted to stockpiling might be more effectively used in income transfer or food distribution initiatives. He characterized the current plan as not prudent. A former former agricultural policy secretary also cautioned against high-price purchases, indicating it could lead to further market pressures. In contrast, Mr. Pretto asserted the necessity of maintaining reserves as a significant aspect of food sovereignty and national security.

The Brazilian government is taking significant steps to bolster food reserves through increased funding for the National Supply Company (CONAB). This initiative aims to combat food inflation while supporting local farmers. While plans include broadening procurement strategies and product offerings under various programs, ongoing challenges including regulatory restrictions and potential market repercussions remain. Stakeholders express diverse opinions, with some advocating for alternative uses of funds, highlighting the complexity and importance of food security measures.

Original Source: valorinternational.globo.com