In 2024, rising food prices pushed up inflation in Brazil. Food prices rose by 7.69% during the last year, pushing up the Broad National Consumer Price Index (IPCA, in Portuguese), which reached 4.83%.
It was the seventh time food had risen more than the country’s official inflation index in the last decade. Since 2018, the rise in food prices has only been lower than general inflation in two years, 2021 and 2023. But it wasn’t always like this.
When comparing food inflation and general inflation in Brazil from 1995, at the start of the Real Plan – a program aimed at stabilizing the Brazilian economy – to 2024, Brasil de Fato found that, until 2004, food prices rarely increased more than general prices. This happened in only three of the ten years, according to data from the Brazilian Institute of Geography and Statistics (IBGE, in Portuguese).
From 2005 onwards, however, the scenario changed. Just as in the decade between 2015 and 2024, from 2004 to 2005, there were another seven years in which food rose more than the IPCA. In the eight years between 2007 and 2014, food only rose less than inflation in one year: 2009.
According to experts Brasil de Fato interviewed, the research proves that rising food prices are not an isolated event. It has become increasingly persistent, especially after the Brazilian agricultural sector decided to turn its efforts to exports, reducing the production of items consumed internally.
“The basic cause of the increase in food products is that we started exporting a lot, especially in this century,” said José Giacomo Baccarin, professor of economics and agricultural policy at the State University of São Paulo (Unesp, in Portuguese) and director of the Zero Hunger Institute.
Baccarin has been studying the dynamics of the country’s food market for years. He was the federal government’s secretary for food and nutritional security between 2003 and 2005, during the first presidential term of Luiz Inácio Lula da Silva (Workers’ Party).
The economist doesn’t rule out the possibility that droughts or floods, such as those that occurred in 2024, could have caused one-off increases in certain food products. He also admits that possible changes in consumption patterns due to the increase in the population’s income may have affected some prices.
For him, however, the problem of food prices, linked to the agricultural model adopted in Brazil since 2000, needs to be seen as something structural before an effective solution is drawn up.
Soy vs beans
The advance of soybean crops in Brazil and the decrease in bean crops are examples of dynamics affecting food prices in the country.
Brazil is the largest soybean producer in the world. However, around 65% of what is harvested doesn’t feed anyone in the country – it is exported.
Over the last 30 years, soybean cultivation has spread throughout the country. Soybean plantations, which occupied 10.6 million hectares in 1993, occupied 44.6 million hectares by 2023, according to the IBGE. This increase is to meet foreign demand.
The beans produced in Brazil, on the other hand, are basically consumed by Brazilians. The area planted with beans fell from 3,000 hectares to 2,700 hectares in the same ten years.
According to Baccarin, the growth in soybean production and the decrease in the production of beans are related. Farmers who opted for soybean export began to profit more as its price on the international market rose. This led bean producers to rethink their business strategies. Some switched to soybeans, which reduced the supply of beans in Brazil and put pressure on its price.
In 2022, for example, a type of bean known in Brazil as “carioca” rose by 27.77%. In 2024, meat prices rose by 20.84% while Brazil set a record for exports of this product.
“Producers are rational. We have a lot of land and capital to invest in agriculture. If the gain from soy is greater, there is more land dedicated to soy and less to other products,” he explained.
Foreign market dominance
In a live broadcast on IFZ, Baccarin showed data from the Food and Agriculture Organization of the United Nations (FAO-UN) on the price of food around the world. When they go up, so does food inflation in the country.
According to him, in general, the price of food fell between the 1960s and 2000. Since then, it has risen. During this same period, food inflation began to predominate over the general inflation index in Brazil.
“Food prices are rising all over the world. Prices reached a new level and then peaked in 2022 because of the war in Ukraine. Now, there are new instabilities on three fronts: climate, geopolitics and finance,” confirmed Walter Belik, retired professor of agricultural economics at the Institute of Economics at the State University of Campinas (Unicamp, in Portuguese) and one of the creators of the IFZ.
Solution
Baccarin said that Brazil should consider measures to control the export of food products to keep domestic prices stable. Although he says he is not against exports, he warns that limits need to be considered.
“We need to have some capacity to arbitrate publicly on the supply of the domestic market and exports,” he recommended. “Today, it is done by the private sector, by economic groups.”
Faced with rising food prices, the government of President Luiz Inácio Lula da Silva (Workers’ Party) has promised to make it easier to import food when it becomes more expensive in the country. He will also direct the Crop Plan (“Plano Safra”, in Portuguese) to boost national production. Possible export barriers were not mentioned as a solution to curb rising prices. Rui Costa, Chief of Staff, ruled out any action that could be seen as an “intervention” in the market to reduce prices.
Lula has already promised to rebuild public food stocks as soon as he returned to the presidency in order to sell them when food prices increase. The measure has not yet been implemented.
