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Growing Economy Brings Price Pain to Brazilian Eaters

Sabrina Valle in Rio de Janeiro
for National Geographic News
July 17, 2008
 
Part 14 of a special series that explores the local faces of the world's worst food crisis in decades.

Cristina Nascimento, 45, has cut down on bread. Since prices for the most popular version among Brazilians—a small roll known locally as French bread—started to escalate, the house cleaner has begun substituting other products.

"I'm trying to be creative. I used to buy seven rolls a day only for my teenage son," she said. "Now I'm making avocado shake [a mixture of avocado and milk]. It's less expensive and has all the energy he needs."

Her story is indicative of the mixed blessings of Brazil's growing economy, which has elevated the fortunes of many while bringing global fiscal troubles home more quickly.

"When you've got strong growth, price increases at wholesale transfer quicker and easier to final consumers," said Luiz Roberto Cunha, an inflation specialist with Pontifícia Universidade Católica do Rio de Janeiro, who pointed out that the country's gross domestic product is growing by more than 5 percent a year.

(Related video: "World Food in Crisis.")

Bread prices have shot up, for instance, because of global increases in the price of grains that have sent Brazil's stockpiles of wheat to their lowest levels in four years.

According to Salomão Quadros of Fundação Getúlio Vargas, the country's most respected independent inflation institute, French bread became 10 percent more expensive in some cities in March alone.

And it's not only bread Nascimento is avoiding. Black beans, the basis of the most traditional Brazilian meals, have also become less frequent on her table, as has soya cooking oil.

"Black beans have become absurdly expensive," she said. "I haven't bought much. And soya oil I've substituted for a cheaper oil."

Good Supply, Bad Prices

Food was responsible for about half of Brazil's 4.46 percent inflation in 2007, according to the country's official index of consumer prices, and the trend has continued so far this year.

That's a moderate increase compared to the skyrocketing prices seen in other countries. But overall, Brazilians now pay more than a fifth of their incomes just to feed themselves.

The impact is most severe for low-income families like Nascimento's, since food takes up a large portion of their domestic incomes, experts say.

Some of the reasons for Brazil's price increases are local, such as poor harvests of black beans and tomatoes.

But a lot of the pressure comes from abroad.

So even though Brazil is self-sufficient in oil and is a leading food producer—the country is the biggest world exporter of soya, sugar, coffee, corn, oranges, beef, and chicken—it is suffering from global price increases.

Soaring oil prices—one of the main causes for the global crisis—have made food costs rise between 15 and 20 percent in Brazil, said agriculture minister Reinhold Stephanes.

Rice is another example. Brazil produces nearly everything it consumes, but international markets have made wholesale prices soar by 31 percent in April, says Conab, the national supply institute.

(Related: "Australia's Long Drought Withering Wheat, Rice Supplies" [May 29, 2008].)

As a result, the Brazilian government suspended exports of the product on April 23 and is encouraging the private sector to do the same to help curb inflation.

The rising prices are forcing Nina Frant, 27, to reprint the menus of the café she owns in the Santa Teresa neighborhood of Rio de Janeiro.

Chocolate croissants, specialty breads, and pies are some of the items that will come with higher prices.

"All my suppliers have readjusted their prices this year at least 10 percent," she said. "I had no other choice but to do the same."
 

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