The Gazette | Rice, bread and meat may become more expensive in ES due to floods in RS

The rains that have hit Rio Grande do Sul since the end of April could have impacts on the economy of Espírito Santo, especially the food retail market. With more than 400 of its 497 cities affected by floods, the state of Rio Grande do Sul accumulates damage to agricultural production and has difficulty distributing its products.

Among the foods coming from Rio Grande Sul to Espírito Santo are rice, soybeans, corn, beef, chicken, apples and potatoes. According to the State Supply Center (Ceasa-ES), items continue to arrive, but if there is a smaller quantity of products from Rio Grande do Sul, prices may increase.

“Despite the delay in the arrival of some products, trucks have taken alternative routes to reach Ceasa,” the Espírito Santo Supply Center announced in a note.

According to economist Felipe Storch Damasceno, Rio Grande do Sul is responsible for 70% of rice production in Brazil. In the current harvest, 30% of the grains had not yet been harvested.

“This causes problems for national production. In addition to the possible loss of this harvest, there is also the difficulty in disposing of the products. In the case of rice, there was a forecast of a 5% decrease in price this year. However, with the current scenario, this is already being reversed”, says Damasceno, who also has a doctorate in Accounting and Administration.

According to Felipe Storch, it is also possible to have an impact on products derived from wheat. “Therefore, products such as bread, pasta and others that depend on the grain may be affected”, highlights the economist.

According to the expert, with the floods in Rio Grande do Sul, large transport, energy and logistics companies paralyzed their operations, which also has an impact on shelf prices. In the case of milk-derived products, a concern in other regions of Brazil, Felipe explains that Espírito Santo does not depend on shipping from the South.

“Our dairy products tend to be from Espírito Santo and Minas Gerais. Minas Gerais is very strong in dairy farming and I believe it is capable of meeting the supply needs we have. It is possible that we will have a price impact, but a lack of products is a more unlikely scenario” , concludes the economist.

According to the Associação Espírito Santo de Supermercados (Acaps), there is still no shortage of products, as establishments in Espírito Santo have stocks for replacement. Still, the agency does not rule out impacts.

“The flood in Rio Grande do Sul will bring impacts not only to Espírito Santo, but to many other states, due to specific logistical difficulties related to products such as poultry and pork, which largely depend on soybeans and corn from Rio Grande do Sul. South”, disclosed Acaps, through a note sent to the report.

According to the Brazilian Animal Protein Association, ten poultry and pork production units are paralyzed or having difficulties operating. According to the UOL portal, the association reports the impossibility of processing inputs and transporting employees amid the floods.

Economist Eduardo Araújo notes that Rio Grande do Sul has a significant amount of debt with the federal government. As a result of the disaster, the State of Rio Grande do Sul and the Union may negotiate some type of forgiveness or reduction of the public debt.

“This could have an indirect impact on the country’s public finances. In addition to the federal government having to make investments in the reconstruction of Rio Grande do Sul, this aspect, that the Union can offer some debt forgiveness, generates a cost which can eventually be passed on to other States”, analyzes Eduardo.

According to the economist, this leads to a tendency to increase taxes and a lack of federal resources to make investments in other states, including Espírito Santo.

Hit by heavy rains since the end of April, the State of Rio Grande do Sul is experiencing a scenario of destruction, with flooding that has already left at least 107 dead, 128 missing and thousands homeless. Of the 497 municipalities, more than 400 were affected and, according to the local Civil Defense bulletin, more than 370 people were found with injuries and more than 1.3 million were directly affected.

According to governor Eduardo Leite, the state will need R$19 billion for its reconstruction.

Amid the tragedy, the National Institute of Meteorology (Inmet) issued a warning of “great danger” for the extreme southeast of Rio Grande do Sul. According to the forecast, the region could be hit by hailstorms and winds above 100 km /H.

Schools, highways and other structures also suffer from the impacts of flooding, as does Salgado Filho International Airport, in Porto Alegre, which is flooded and has no plans to return to operations.

Rice, bread and meat may become more expensive in ES due to floods in RS

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