Food prices should remain under pressure until early 2022, says industry

Food prices should continue under pressure in the short term, until the first months of 2022, projects João Dornellas, president of Abia (Brazilian Food Industry Association).

In the view of the business leader, a combination of factors tends to prevent a more consistent slowdown — or even a fall — in the values ​​of goods in the final stretch of 2021.

This list includes the persistent demand for agricultural commodities in the international market, the effects of adverse weather conditions, which harmed crops in Brazil, and the still high production costs.

“In the short term, unfortunately, we do not see a downward trend in prices. Pressure remains very strong, as does demand,” he says.

“Commodities are getting much more expensive for the industry compared to the pre-pandemic. In addition, we had the high dollar. All of this increased food prices.”

According to Dornellas, consumers should find a more comfortable situation on supermarket shelves only after the first quarter of 2022.

This estimate is based on prospects for better harvests for next year, in addition to less intense cost pressure.

I’m 2021, ah drought and the frost record caused losses to various crops, which impacted the prices of food to the consumer.

The water crisis also raised production costs in the industry because it made electricity generation in Brazil more expensive. The water scarcity flag, which increases the electricity bill, should be in effect until April of next year.

“The weather can help next year and, with a good harvest, we will be in a better situation in terms of food prices”, analyzes Dornellas.

In the 12-month period, until October, food and beverages accumulated inflation of 11.71%, according to data from the IPCA (Broad National Consumer Price Index). Throughout 2021, the drive became even greater.

The advance was smaller in recent months, but still remained at a high level, above the IPCA, which registered a 10.67% change until October.

During the pandemic, the demand for agricultural commodities was more heated in the international market. In this context, the dollar also advanced, causing additional pressure on food prices.

This is because the higher US currency encourages exports of items such as soybeans, corn and meat, which can reduce the supply on the domestic market.

The dollar above R$ 5 still makes the import of inputs used in food production, such as fertilizers, and fuel, necessary to transport food from the countryside to the table more expensive.

In the midst of this scenario, Abia proposes a measure that makes food validity rules in Brazil more flexible.

The entity suggests adopting the concept of “best before”. This model is already in force in countries abroad, in regions such as Europe, cites the organization.

Through it, foods can lose freshness or nutrients after a certain date, but still remain safe to use. The current system in Brazil seeks to prevent the sale and consumption of out-of-date items.

The concept of “best before”, says Abia, would not apply to all foods. Highly perishable products, such as milk in plastic containers and fresh meat, would be left out.

Abia expects a position from the federal government on the subject after the first quarter of next year, says Dornellas.

In the entity’s view, the new model, if linked to strict quality programs, would help fight food waste.

“It is a proposal that we are making. It will facilitate the fight against waste”, he says.

“Current legislation creates the idea that the quality of the product is high until the expiration date and then drops to zero. From then on, food would be unsuitable for consumption. It’s not like that. The product leaves the industry and loses it. little by little. A biscuit, for example, could be less crispy [após o prazo preferencial para consumo].”

Abia claims that the food industry operated in September with 76% of its installed capacity.

During the health crisis, rising food prices and difficulties in the job market led Brazilians to seek more donations and even leftover supplies.

In Fortaleza (CE), for example, a recent video shows a group looking for food in a garbage truck.

Other cases that became known were registered in Rio de Janeiro, where another truck was distributing leftover meat, and in Cuiabá (MT), which had queues looking for donations of ox bones.