Is agribusiness the villain of Brazilian inflation?


In short: no, agribusiness is not the villain of Brazilian inflation. In the next paragraphs, some elements and data on this issue are presented, which explain the complexity of the scenario and demystify this view. I also bring to the beginning of the text something that will be covered again at the end: regardless of the causes, the increase in domestic food prices exists and is very punitive, especially for the poorest, requiring urgent action to protect those (many, given the current situation) whose fundamental right to adequate food is being violated.


To answer the proposed question, first, a broader view in time and space on the issue of food prices, their social effects and the role of agribusiness is presented. Then, the causes behind the current intense acceleration in domestic agricultural prices are discussed, focusing on the differentiation between the observed price movements and the causes that are at the root of these movements. Finally, the central question about the difference between price and profit increases in the productive sector is briefly discussed.


Until the mid-1980s, Brazil was a net food importer, which frequently faced situations of insufficient food supply[1]. It was necessary to modernize national agriculture so that it would be productive enough to guarantee the supply of food for the population that was growing and urbanizing in the country – which was done by a set of actions, initially carried out mainly by the public sector, with focuses on technological advances. The results of these actions regarding increases in agricultural production[2] were spectacular. From 1974 to 2020, the production of grains (rice, beans, corn, soybean and wheat) multiplied by almost 7; the cattle herd increased 136%, the swine herd, 20% and the chicken herd grew 440%[3]. And this expansion took place without putting the same pressure on land use – the harvested area with the same grains was multiplied by 2.3 and the pasture area in 2017 was only 3.5% larger than in 1970². Several scientific studies have shown that productivity has been the key element for the expansion of Brazilian agriculture, so that this expansion is characterized by expressive land-saving effects. According to Vieira-Filho (2018), 366.0 million additional hectares would have been needed (43% of the national territory) to reach the agricultural production observed in 2015 without the productivity gains obtained from 1990 onwards[4].


This evolution had many and relevant positive consequences. From a net importer of food, Brazil has become a major agricultural exporter, with agribusiness decisively contributing to the trade balance and to alleviate food security problems around the world. The information presented below shows some positive consequences of this process for Brazilian families, which is the crucial point for the discussion of this text.


The share of food expenditure on household consumption expenditure has consistently dropped in recent decades: from 30.61% to 24.23% between 1974/1975 and 1987/1988, to 23.57% in 1995/1996, 21% in 2002, 20% in 2008 and then 17.5% in 2018 (ROCHA, 1995[5]; CASTRO; MAGALHÃES, 1998[6]; POF-IBGE). In practice, this means that Brazilian families were able to diversify their consumption, and allocate a greater part of their income to transport, housing, health, education etc. And agribusiness has greatly contributed to this process, by expanding the supply of food at affordable prices. The (very modest)[7] increase in average per capita income, in addition to urbanization and changes in habits, also explain this result.


Brazilian official inflation (IPCA) accumulated a 307% increase from 1995 to 2018. For the specific group of household food, the consumer prices increase was practically the same (308%). For other important groups in the consumption basket, such as housing and transportations, the increases were 417% and 360%, respectively, above those observed for household food in these 24 years. For other groups with lower weight, such as household items and clothing, the variations were smaller (99% and 191%, respectively). This was the general scenario before the current acceleration in agricultural prices started in mid-2019[8].

And how does the situation in Brazil compare to other countries? When comparing the share of food expenditures in household expenditures among countries, Brazil ranks closer to European countries than to its peers or neighbors. In 2016, food expenditures represented 16% of household expenditures in Brazil; according to the same source, for Portugal, Spain, France, and Italy, for example, the shares were 17%, 14%, 13% and 14%, respectively; in China, India, and South Africa, they were 22%, 30% and 19%, respectively, while in Argentina, Bolivia and Peru, the shares exceeded 25%[9].


Therefore, agribusiness does not seem to contribute to a situation of food insecurity in the country, on the contrary. This sector performance, added to other factors and the political effort with the Zero Hunger campaign, for example, culminated in the removal of Brazil from the FAO hunger map in 2014. Hunger in Brazil was then a localized problem, and no longer a national problem, as pointed out by Rafael Zavala, current FAO representative in Brazil[10]. Since then, the situation has deteriorated again. With the recession that started in 2014, this worsening was initially due to the increase in poverty and budget cuts in programs aimed at the issue of hunger. Currently, the situation has been aggravated by the new and intense increase in poverty in the face of the crisis triggered by the pandemic, together with the sharp rise in the prices of several essential products, including food.

Part of this increase in domestic food prices reflects the global situation and is not specific to Brazil. International agricultural prices in dollars increased by around 30%[11] comparing the period from January to September 2021 with the same period in 2019. Broadly speaking, this acceleration reflects rising global demand – with global economic recovery – combined with supply problems such as the African Swine Fever in China, disruptions in supply chains due to the pandemic and various adverse weather effects on the main agricultural producing countries.


However, in the same comparison (from January to September 2021 compared to the same period in 2019), agricultural prices in Brazilian Reais, measured by the IPPA-Cepea, rose 92%. The significant devaluation of the Real (37% in this period) boosted the inflationary effect of the rise in international food prices. In the recent past, during the 2003-2011 commodity boom, this did not happen mainly because the significant exports of ores and agricultural products by Brazil at high international prices generated a growing inflow of foreign exchange and an expressive appreciation of the Real, which softened the effect of the rising international prices over domestic prices (and inflation)[12]. And now, the behavior of the exchange rate has not been guided only by its supply and demand, but strongly influenced by political and institutional factors[13].


In this scenario, Brazilian consumers have been faced with more expensive foods in supermarkets, and it seems intuitive to attribute the rise in inflation to the increase in the prices of some products. However, Barros et al. (2021)[14] measured the factors actually responsible for food inflation in 2020, or the causes that are at the root of the increase and found that a relevant part of the inflationary burden attributed to agricultural prices (IPPA) was due to increases in the exchange rate, diesel and international prices.


Global demand, interruptions in supply chains, weather, exchange rates and diesel, the main reasons for the current rise in food prices in Brazil, are all beyond the control of the Brazilian agricultural producer. Furthermore, for many producers, the rise in prices has not meant an increase in profitability. An increase in the price of the product favors the producer if the rise in costs does not occur with an even greater intensity. In livestock, this situation is currently very evident. The prices[15] of live cattle, live pork (São Paulo) and chicken (frozen) increased, respectively, 101%, 57% and 53% between 2019 and 2021, considering the periods from January to September; at the same time, the prices of calf and corn, the main items in the cost of production, rose 121% and 146%, respectively. In agriculture, the higher prices of fertilizers, pesticides, fuels, among others, also boosted production costs. In this situation where product prices and costs are on the rise, the economic results obtained are very heterogeneous among rural properties and it is practically impossible to generalize. However, the central point for the debate in this text remains: the scenario is more complex than the analysis of supermarket prices allows us to imagine, and many producers are not benefiting from food inflation.

Finally, whatever the causes, it is known that the current situation has serious consequences for the poorest families. On the one hand, the unemployment rate is 14.1% of the labor force (14 million unemployed)[16], and on the other, current inflation is higher the lower the family income. According to information from IPEA, inflation accumulated in 12 months in August 2021 was 10.63% for very low-income families, while it was 8.04% for high-income families[17].


The current situation in Brazil is so serious due to a preexisting condition of poverty (aggravated by the crisis that started in 2014 and then by the pandemic) that does not receive the attention it deserves from public policy, rather than the inefficiency of Brazilian agriculture. For the millions of families in poverty situation, chronic or transient, the observed increase in food prices could not be absorbed in the budget; as a result, the number of people in situations of mild and moderate food insecurity and of hunger has increased significantly. According to a report by the Rede PENSSAN[18], 19 million Brazilians faced hunger in 2020. For these people, the causes do not matter, and it is not possible to think about the medium term. Urgent social protection actions are crucial until the situation returns to normal – both programs that involve well-planned cash transfers, and others that contribute to the eradication of hunger.


[1] See: CHADDAD, F. The economics and organization of Brazilian agriculture: Recent evolution and productivity gains. Academic Press, 2015.

[2] This process, as it took place, also had costs, especially social (many establishments were left out of agricultural modernization) and environmental.

[3] Data from PAM-IBGE, PPM-IBGE and agricultural census-IBGE.

[4] See: VIEIRA FILHO, J.E.R. Efeito poupa-terra e ganhos de produção no setor agropecuário brasileiro. Texto para Discussão, 2018.

[5] See: ROCHA, S. A estrutura de consumo das famílias metropolitanas em São Paulo e Recife: evidências e implicações. Pesquisa e planejamento econômico, v. 25, n. 2, p. 297-322, 1995.

[6] See: CASTRO, P.F.; MAGALHÃES, L.C.G. Recebimento e dispêndio das famílias brasileiras: evidências recentes da Pesquisa de Orçamentos Familiares (POF)-1995/1996. 1998.

[7] IPEA data show that the average per capita household income in the country increased by 35.2% from 1976 to 2008.

[8] Considering until September 2021, the other price groups did not follow the rises obtained in food, housing, and transportation. For these groups in the same order, the accumulated since 1995 became 458%, 522% and 446%.

[9] Original USDA data, compiled by “Our World in Data”:

[10] See: https://revistagloborural./Noticias/Entrevista/noticia/2021/09/precisamos-transformar-os-sistemas-alimentares-diz-representante-da-fao-no-brasil.html

[11] World Bank Commodity Price Data, monthly indices based on nominal US dollars, 2010=100, 1960 to present – Agriculture; ou FAO Food and Beverage Price Index, 2016 = 100.

[12] See: Barros, G.S.C. Medindo o crescimento do agronegócio: bonança externa e preços relativos. In: Agricultura, transformação produtiva e sustentabilidade. IPEA, 2016.

[13] See: Barros, G.S.C. A Inflação nos preços dos alimentos em 2020 e 2021 e perspectivas. Cepea, 2021. Disponível em:

[14] See: Barros, G.S.C.; Carrara, A.F.; Silva, A.F.; Castro, N.R. O que provocou o repique da inflação em 2020? Cepea, v. 1, n. 1, abril, 2021. Disponível em:

[15] Cepea prices.

[16] Continuous PNAD data from IBGE, for the second quarter of 2021.

[17] See:

[18] See:





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