Brazil's Response to the Food Crisis

The summer of 2012 saw one of the worst droughts on record in the United States and Eastern Europe, which led the prices of internationally traded soybeans and corn to set record highs.  In July, the World Bank Food Price index, which measures the price of internationally traded food commodities against the U.S. dollar, saw a 10% jump from one month to the next.  While the index and prices generally have moderately declined since then, international food prices still remain near record highs.  There is now a sense that high, volatile prices have become the new normal (Food Price Watch).  While Brazil is a net food exporter and has increased its food production capacity in recent years, the country has nonetheless felt the pinch of high food prices, and too many Brazilians still find themselves in extreme poverty.  In that context, what has been Brazil’s response to the crisis, and how can policymakers ensure greater food security for their citizens?

In the 1970s and 1980s, Brazil instituted a number of programs geared toward helping the poor pay for food expenses.  During this time, the National School Food Program provided meals for all students enrolled from pre-school to the second grade.  Additionally, in 1976, the Brazilian government began the Worker Food Program to assist low-income workers meet their basic food needs. The National Milk Program for Needy Children, which aimed to provide needy families with one liter of milk per day began in 1986.  While these programs did succeed in helping some families meet the basic necessities, they suffered from a lack of political prioritization as well as from targeting that was not sufficiently selective (Pessanha).

In the 1990s, Brazil created the National Food and National Monitoring Program in order to centralize priorities and more effectively monitor food problems as they arose and identify the social groups most vulnerable to food security issues.  However, this program fell victim to the austerity measures put in place by then-president Fernando Collor de Melo.  The turbulence of the political environment together with the serious macroeconomic imbalances of the era prevented a focus on food security issues.  The topic came into focus again in the early 2000s.  This period saw the launch of the Fome Zero (“Zero Hunger”) program, which was one of President Lula’s principal objectives after his election in 2001.  The program is built on four main pillars: access to food; strengthening family agriculture; income generation; and finally, implementation and social responsibility (Pessanha).

Fome Zero has been the basis for the poverty programs Brazil has recently gained a reputation for, such as Bolsa Família, inter alia.  Bolsa Família is a targeted conditional cash transfer program that provides funds to low-income families with schoolchildren to pay for food-, education-, and health-related expenses contingent on school attendance.  Fome Zero also offers insurance and financing benefits to family farmers, guaranteeing income for 6 months in cases of severe drought and offering 100% financing to certain small-scale farmers.  It also aims to generate income for socially excluded populations through microcredit financing, education, and food-for-work programs. 

These measures are in keeping with the recommendations by Marie Chantal Messier, a Senior Nutrition Specialist at the World Bank.  She states that in order to protect mothers and young children from malnutrition, “a balanced strategy of income growth and investment in more direct interventions into health and nutrition are needed.”  Brazil’s focus on income growth through Fome Zero, in conjunction with other measures to generate this growth, has allowed the Brazilian middle class to grow significantly in recent years, with the income share of the second-highest quintile doubling in the last decade and the middle class comprising nearly a third of Brazil’s inhabitants (up from 15% in the 1980s) (World Bank).

However, even in light of Brazil’s impressive performance in diminishing income inequality, much is left to be done to adequately address the food crisis, as evident by the significant increase in food prices recently.  Rising food prices and inflation as a whole hurt poor consumers the most, as it forces them to devote more of their limited income for the same amount of goods.  In order to adequately measure this discrepancy, Brazil developed a consumer price index (IPC) for those who earn up to double the minimum wage to measure how inflation affects low-income consumers.  The IPC-C1, as this index is called, saw an increase of 7.15% in the last 12 months, versus only 6.16% for the normal IPC.  Notably, food costs for low-income consumers have risen 14.69% in the last 12 months, with astronomical increases in onions and tomatoes, especially, which respectively climbed 25% and 10.5% in March alone (IBRE). 

According to the Brazilian Central Bank, wholesale food prices have actually fallen, but the Bank faulted the costs of freight and other services for preventing lower prices from reaching consumers (Cobucci).  Statistics bear up this claim: in 2012, Brazil’s port infrastructure was rated 2.6 out of 7 (with 1 being “extremely underdeveloped” and 7 being “well developed and efficient by international standards”) by the World Bank and in 2010, only 13.5% of Brazil’s roads were paved.  Additionally, in 2010, Brazil’s total network of roads stands at 1.5 million kilometers; in contrast, the network of roads in the US (which is comparable in territory size) stands at over 6.5 million kilometers.  Although speaking of Latin America generally, a World Bank news article stated that that logistics expenses comprise between 16 and 26% of Latin American GDP, and between 18% and 32% of the value of commodities.  In contrast, in OECD countries, these figures are both 9% respectively (“What are the facts about rising food prices and their effect on the region?”).

In this context, while Brazil has been laudable in increasing access to food for underprivileged populations through inclusion of the poor in economic growth and conditional cash transfer programs, Brazilian policymakers must concomitantly focus on increasing market access for goods through domestic logistics and infrastructure improvements.  This would allow for three major advances:

1)      the economic and social inclusion of underserved regions of the country;

2)      a decrease in transportation costs; and,

3)      expanded market access for farmers in underconnected regions of the country.

Meanwhile, Brazil should also work to update its famed Bolsa Família, which is not automatically indexed to the IPC.  To ensure adequate assistance levels are maintained in times of inflation, the program must be indexed to the food sector of the IPC.  Brazil should further consider chaining Bolsa Família payments to the IPC-C1 (the low-income IPC) to give the poor a greater cushion when inflation rises. 

Works Cited

Cobucci, Luciana. "BC Vê Risco De Alta Inflação Em 2013, Mas Promete Medidas." Jornal Do Brasil. 2 Apr. 2013. 15 Apr. 2013.
"Food Price Watch." The World Bank. Aug. 2012. Web. 15 Apr. 2013.

"High Food Prices: Latin American and the Caribbean Responses to a New Normal." The World Bank. 15 Apr. 2013.

Instituto Brasileiro De Economia. 15 Apr. 2013.

Messier, Marie Chantal. "Rising Food Prices: Time to Put Your Money Where Your Mouth Is?"  20 Aug. 2012. 15 Apr. 2013.

Pessanha, Lavínia Davis Rangel. "A Experiência Brasileira Em Políticas Públicas Para a Garantia Do Direito Ao Alimento." Instituto Brasileiro De Geografia E Estatística. N.p., n.d. Web. 15 Apr. 2013.

Rocha, Cecilia. "Developments in National Policies for Food and Nutrition Security in Brazil." Development Policy Review 27.1 (2009): 51-66. Print.

"What Are the Facts about Rising Food Prices and Their Effect on the Region?" The World Bank. 13 Sept. 2012. Web. 15 Apr. 2013.

"World DataBank." The World Bank DataBank. N.p., n.d. Web. 15 Apr. 2013.