Food inflation and food insecurity in Brazil – 06/12/2023 – Pablo Acosta

The Brazilian economy has been slowly recovering from the economic crisis brought about by the Covid-19 pandemic, registering GDP growth of 2.9% in 2022. However, the vulnerable population, protected by major changes in the social protection system, has become more dependent on government transfers.

The monetary gains promoted were not fiscally sustainable, government payments shrank and poverty returned with force in 2021, reaching a rate of 28.4%, in part due to the reduction of the coverage of the Emergency Aid program by half. In addition to the poverty rate, other social indicators show concern, such as moderate or severe food insecurity, which, in 2022, reached 30.7% of the population.

In recent years, the diminishing role of income from work in reducing poverty among Brazilians has meant that dependence on non-labor income has been accompanied by volatility in income, a factor that has contributed to increased food insecurity.

At least since 2014, Brazil had left the FAO Hunger Map. The rate of moderate and severe food insecurity measured using Pnad data was 7.8% in 2013. However, the most recent National Surveys on Food Insecurity in the Context of the Covid-19 Pandemic in Brazil suggest that 20.5% of the Brazilian population experienced moderate or severe food insecurity in December 2020, a rate that rose to 28.4% between November 2021 and April 2022. In addition, the rate of food insecurity in the rural area is 20% higher than in the area urban.

The steady rise in food inflation may also have exacerbated food insecurity in recent years. Brazil is one of the world’s leading agricultural producers, but its agribusiness is largely connected to global supply chains and exports, which limits its ability to protect domestic consumers when international commodity prices rise. While the general consumer price index in Brazil rose 21.7% between the end of 2019 and the end of 2022, food prices rose 37.5% in the same period.

Even more worrying is that the typically most vulnerable states have suffered the worst effects of inflation and food insecurity. Food prices, a component that represents between 20% and 25% of the expenses of the most vulnerable families, had an enormous negative impact on their purchasing power. Thus, some of the poorest states in the country have the worst numbers in terms of food insecurity. In the most vulnerable states in the North and Northeast regions, food prices rose as much as those in the richest states in the South and Southeast. However, with less ability to deal with rising prices, families in the poorest states, such as Maranhão and Pará, experience a worrying degree of food insecurity.

Looking to the future, it is important that the Brazilian State has public policies aimed specifically at meeting the minimum nutritional needs of the poorest without losing sight of coordination with other programs aimed at generating income and the productive insertion of these families.

Since the new government took office in January, the fight against hunger seems to be a priority on the agenda. The government recreated the National Council for Food Security, which had been closed in the previous term, reformulated the Food Acquisition Program and increased the resources allocated to the National School Feeding Program by approximately 37%.

On another front, the government redesigned the Bolsa Família income transfer program and expanded its benefits. Measures of poverty and food insecurity capture different dimensions of material deprivation. It is therefore welcome that the government’s effort on the issue of food security has taken place in conjunction with a review of the main cash transfer program.

Even so, greater integration of the most vulnerable into production chains is indispensable to sustainably guarantee the minimum standards of living for families. Evidence from a telephone survey commissioned by the World Bank suggests that among Bolsa Família beneficiaries, an average of R$737 per capita per month is estimated to cover their basic needs, notably above the current average benefit of R$714 per month. family.

Therefore, productive inclusion through the labor market is essential for the sustainable economic development of this group.

_{Column written in collaboration with my World Bank colleagues Gabriel Lara Ibarra, senior economist, and Ricardo Campante Vale, consultant.}

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