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The Lula government is preparing stockpiles of rice, corn and possibly wheat to control prices and contain food inflation. The actions include option contracts and redirecting credit to producers
The government of Luiz Inácio Lula da Silva (PT) is adopting measures to try to control the rise in food prices, which directly affect the pockets of Brazilians and put pressure on inflation.
O Ministry of Agrarian Development (MDA)) articulates actions to reduce the costs of essential items, such as rice, corn and, possibly, wheat.
Measures for stock formation
According to information from Metrópoles, one of the main strategies adopted by the government is the creation of regulatory stocks. The MDA is preparing a significant purchase of rice and corn to ensure that prices do not rise further.
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The measure includes an option contract worth R$1 billion for the acquisition of rice, which should be completed by July of this year.
This type of contract guarantees farmers a minimum price for the product, even if the market value is higher.
If the market is more favorable at harvest time, the producer will be able to sell directly to other buyers, without the obligation to negotiate with the government.
In addition to rice, the government is also evaluating forecasts for similar contracts for corn and even doing the same with wheat, an item whose production in Brazil is still limited, mainly due to climate issues and demand for supervision.
The purchase of these products would help to avoid shortages and speculation in the market, contributing to price stabilization.
The role of credit and financing in controlling inflation
Another aspect of the policy adopted by the government is the redirection of resources to finance the production of basic food basket items.
The strategy involves expanding credit to small and medium-sized producers through Banco do Brasil. The idea is to stimulate national production and ensure that the supply of essential foods increases, without having to resort to similar costs.
The focus is to increase domestic production and help keep prices low, especially at critical times, such as collections after extreme weather events or when commodity prices rise on the international market.
Action against food inflation
The rise in food prices has been one of the biggest challenges for the Lula government, which has faced difficulties in containing the impact of inflation on family budgets.
Despite initiatives to control inflation, the Lula government ruled out measures such as direct price control and changes to product expiration dates.
Furthermore, the government believes that the rise in coffee prices, for example, is the result of external factors and there are no expectations of a drop in prices in the current harvest.
Another topic discussed was the possibility of reducing import tariffs for other grains, but the MDA department makes it clear that, to a large extent, imports are already made with Mercosur countries, without additional tariffs.
