Latin America's poor tighten belts despite commodities boom

 

Sky-high demand around the world for farm commodities has exporters in Latin America rubbing their hands in glee, but the region's poor are suffering as prices for bread, milk and meat rocket.

 

In Brazilian street markets and supermarkets customers think twice before forking out for products that are helping build their country's international reputation as an agricultural power.

 

"I can use black beans instead of lentils, but what can I do for bread and milk?" asked Theresa Cortes as she scrutinised prices in a supermarket aisle in a poor neighborhood near Rio de Janeiro's famed Copacabana beach.

 

The challenge faced by the 24-year-old mother of two is a common one, as Brazilian consumers struggle with a hike in the cost of grocery staples that has far outstripped the inflation rate of 4.47 per cent.

 

Last year, meat prices rose 22 per cent, and bread and soya oil 8 per cent.

 

"World prices are largely behind the increases," explained Eulina Nunes, of the state Brazilian Geography and Statistics Institute.

 

The 22-per cent rise in farm products experience in the past two years "has globally been good for Latin America," because it has turned the region into a net exporter, said Claudio Loser, an economist at the Washington-based thinktank Inter-American Dialogue.

 

The biggest winners on the export markets have been Brazil and Argentina. Chile, Colombia, Costa Rica, Ecuador and Uruguay have also benefited, though to a lesser extent, he said.

 

Eighteen other Latin American countries – Mexico, Venezuela and Cuba chief among them – have, in contrast, suffered a "negative shock" from the trend.

 

Brazil's exports of beef, soya, chickens, sugar, coffee and orange juice account for two-thirds of its products sent abroad and in 2007 brought in $161 billion (Dh590.87 billion).

 

At the same time, it implemented price-stabilization policies and an increase in the minimum wage to help off-set – to a degree – the skyrocketing price pressure on farm goods, economist Marcelo Neri of the Getulio Vargas Foundation said.

 

Between 2004 and 2007, 10 million jobs were created in the country, and in 2006 alone, nearly seven million people were hauled out of the poverty bracket.

 

In Argentina, blistering growth of 8 per cent since the financial collapse of 2001 has in large part been riding on soya crops, which have become the country's primary export.

 

But the plant, which has become known as "green gold" because of the profits to be made, has taken over half of Argentina's farmland, diminishing the area reserved for raising the nation's famed beef and other produce.

 

Also, just 20 per cent of soya-growers account for 80 per cent of the overall production, leaving the majority of 300,000 farmers in the sector chasing crumbs and living precariously.

 

Venezuela's growth, unlike that of most of its neighbors, relies on massive oil reserves. They have helped President Hugo Chavez's resolutely leftwing government reduce poverty from 18.6 per cent in 2004 to 4.6 per cent to today.

 

But the country is also forced to import much of its food, especially as rigid price ceilings on milk, eggs, meat, sugar and flour have made in-country production unfeasible.

 

Mexico has its own oil bounty. And yet the poverty that affects nearly half of its 106 million inhabitants has not receded. On top of that, producers of beans, rice and corn fear that the North American Free Trade Agreement will result in more pain than gain. (AFP)

 

 

In Depth