{"id":93230,"date":"2025-03-06T22:29:20","date_gmt":"2025-03-07T01:29:20","guid":{"rendered":"https:\/\/murray.adv.br\/?p=93230"},"modified":"2025-03-06T22:29:22","modified_gmt":"2025-03-07T01:29:22","slug":"government-gathers-industry-retailers-amid-blame-game-over-inflation","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/government-gathers-industry-retailers-amid-blame-game-over-inflation\/","title":{"rendered":"Government gathers industry, retailers amid blame game over inflation"},"content":{"rendered":"\n
Meeting follows industry\u2019s claim that stores fail to pass on price reductions<\/strong><\/em><\/h6>\n\n\n\n

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03\/06\/2025 <\/p>\n\n\n\n

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Facing low approval ratings for President Lula, the Brazilian government has convened a second round of meetings within a week with business representatives to seek support in curbing food inflation. This step comes amid a blame game between industries and retailers over the past few days, with no concrete actions defined after last week\u2019s ministerial meetings with sector leaders, as reported by Valor.<\/p>\n\n\n\n

A new round of discussions is scheduled for Thursday (6) between the federal government and associations representing sectors such as meat packing, sugar and alcohol, vegetable oils, biodiesel, retailers, and wholesalers. Sources indicate this agenda was organized at the last minute, late Wednesday (5).<\/p>\n\n\n\n

Approximately 30 government and sector representatives are confirmed to attend the meeting, the first to involve the entire production and distribution chain since the spike in food prices. \u201cThe government wants quick actions and demands measures that generate positive political effects,\u201d said a wholesale company\u2019s executive.<\/p>\n\n\n\n

On Thursday (27), Agriculture and Minister Carlos F\u00e1varo and Agrarian Development Minister Paulo Teixeira met with representatives of these same sectors. Hours later, Mr. F\u00e1varo met with supermarket and wholesale leaders in a discussion that extended into the night with no significant progress.<\/p>\n\n\n\n

The government\u2019s move last week coincided with the release of a Genial\/Quaest survey showing President Lula would only defeat Jair Bolsonaro in a runoff round in the states of Bahia and Pernambuco.<\/p>\n\n\n\n

During the previous meetings, industry and retail leaders were questioned about passing on certain food price reductions to the market and asserted to ministers that they were not responsible for high prices. These discussions occurred separately with each sector.<\/p>\n\n\n\n

\u201cEveryone was passing the buck, but they all know the problem lies with the government, which needs to cut expenses and restore market and public confidence, not with the companies. However, this was not addressed in the meetings,\u201d said a source familiar with the matter.<\/p>\n\n\n\n

According to two sources consulted after the meetings, there is increased pressure from the government than in previous meetings, especially with retailers. However, for a third source, nothing unexpected was seen in the meetings and the level of pressure was natural. \u201cThat is normal; in their position, I would adopt the same stance,\u201d a producer said.<\/p>\n\n\n\n

Representatives from the soybean oil and meat sectors questioned the trade sector\u2019s stance, reporting that many retailers and wholesalers are slow to pass on recent price drops.<\/p>\n\n\n\n

Meatpacking companies said retail and wholesale sectors have not fully passed on the reductions in meat prices in 2025. However, later, during discussions with retailers, supermarket representatives claimed this had occurred and that the reductions submitted by producers were minimal compared to last year\u2019s significant increase.<\/p>\n\n\n\n

Meat packing industry leaders indicated during the meeting that there had been a nearly 15% reduction in meat prices at the farm and processing plant levels earlier this year and pointed out that there is potential for further declines over the year.<\/p>\n\n\n\n

Minister F\u00e1varo advocated for a faster reduction in soybean oil prices in stores and urged the sector to propose solutions. According to the Extended Consumer Price Index (IPCA) measured by the Brazilian Institute of Geography and Statistics (IBGE), soybean oil\u2019s price rose 18.7% in 2024 and 5.1% in December alone. Industry representatives revealed graphs portraying declining prices and photos of prices in Bras\u00edlia supermarkets.<\/p>\n\n\n\n

Additionally, producers suggested temporarily eliminating import tariffs on crude soybean oil (9%) and packaged refined soybean oil (10.8%).<\/p>\n\n\n\n

This suggestion was influenced by the 2023\/24 soybean crop failure and strong domestic demand, largely from the biodiesel industry. \u201cEliminating import taxes aims to offer the government a concrete short-term solution. I don\u2019t know if they will find it sufficient, but it provides something competitive,\u201d a source said.<\/p>\n\n\n\n

The potential expansion of wheat import quotas is also an issue on the government\u2019s agenda. A strategy of taxing soybean, corn, meat, and ethanol exports remains without consensus in the government.<\/p>\n\n\n\n

When meeting with retail leaders, Mr. F\u00e1varo questioned the price increases and the pace of passing on price fluctuations. Supermarket representatives argued that price moves have reached consumers and added that the sector\u2019s net margins are below average, affected by Lula\u2019s administration\u2019s high interest rates.<\/p>\n\n\n\n

\u201cWe stated that the situation is normal. In other words, what we receive from producers is passed on to consumers. It\u2019s impossible to speculate, as the most inflated products are perishable and cannot be stocked,\u201d said a segment spokesperson.<\/p>\n\n\n\n

A price table for meats, considering average prices, was reportedly presented to the ministry, showing that from October to December, the price variations received from meatpacking plants were almost entirely passed on. In January, the table indicated an average 2% price decrease from meatpacking plants to retailers compared to December.<\/p>\n\n\n\n

The reduction retailers receive from producers is passed on the following month, and not immediately.<\/p>\n\n\n\n

\u201cMeat attracts foot traffic in stores; if the price drops had been more significant, we would have passed them on as it\u2019s in our interest,\u201d a wholesale CEO said.<\/p>\n\n\n\n

According to three sources, the minister suggested that industry and retail agreed to a commitment to ensure that all price reductions would reach consumers. \u201cThere was an understanding that companies could monitor everything, both increases and decreases,\u201d said a vice president of a wholesale chain.<\/p>\n\n\n\n

Representatives argued that this already occurs, according to each company\u2019s strategies. However, sector entities do not account for the decisions of their members, who are competitors and operate in a free market with no government interference.<\/p>\n\n\n\n

On Friday (28), after both meetings, expectations were that measures to curb rising food prices would be discussed in a meeting between Mr. F\u00e1varo and Mr. Lula. However, the conversation did not progress as it would require deeper engagement of sectors and companies, Valor learned.<\/p>\n\n\n\n

For both producers and retailers, there is no government focus on actions that could impact companies\u2019 productivity or efficiency, resulting in potential price reductions.<\/p>\n\n\n\n

At the end of November, supermarket representatives had submitted suggestions to the government, including greater flexibility in labor contracts due to payroll costs, as well as creating a new price validity marker for a basket of products without eliminating expiration dates. That could reduce sector losses, potentially impacting prices.<\/p>\n\n\n\n

These topics have not advanced since initial discussions and were not the government\u2019s focus in the meeting.<\/p>\n\n\n\n

From the perspective of beef and pork producers, technical issues that could enhance productivity were also presented at the meeting.<\/p>\n\n\n\n

Privately, companies associated with entities that have been meeting with the government told Valor that the rise in food inflation is partly due to a weaker real against the dollar, amid a tense external environment with Donald Trump\u2019s administration, along with new pressures such as avian flu and crop failures. However, there is also a loss of investor confidence in the government due to a lack of clear measures to contain public spending.<\/p>\n\n\n\n

In the round of meetings scheduled for Thursday (6), two sessions will be coordinated by Vice President and Minister of Development, Industry, Commerce, and Services (MDIC) Geraldo Alckmin. There is no confirmation of President Lula\u2019s participation or an announcement of measures.<\/p>\n\n\n\n

The first session will include ministers F\u00e1varo and Teixeira and representatives from the Ministry of Finance. In the afternoon, the meeting will be attended by retail representatives and producers. The MDIC did not respond when contacted.<\/p>\n\n\n\n

When contacted on Wednesday (5), the Ministry of Agriculture, the Ministry of Agrarian Development, and supermarket association ABRAS did not comment. ABIEC (beef exporters\u2019 association) chose not to comment. ABAD, representing wholesalers, said it would make all efforts to counter inflation threats and support a competitive and legally secure country.<\/p>\n\n\n\n

*By\u00a0Adriana Mattos\u00a0e\u00a0Rafael Walendorff\u00a0\u2014 S\u00e3o Paulo and Bras\u00edlia<\/p>\n\n\n\n

Source: Valor International<\/p>\n\n\n\n

\nhttps:\/\/valorinternational.globo.com\/\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

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