Brazilian small businesses struggle to survive as food prices rise

by Jennifer Ann Thomas | Thomson Reuters Foundation
Monday, 25 July 2022 09:45 GMT

Residents carry cooking gas cylinders after buying them at a fair price amid high energy prices partially caused by inflation, as part of an initiative organised by the Federation of Oil Workers (FUP), in Vila Vintem slum, Rio de Janeiro, Brazil October 28, 2021. REUTERS/Pilar Olivares

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The inflation diaries: Small food firms are battling to stay afloat in Brazil as rising overheads eat into profits

By Jennifer Ann Thomas
SAO PAULO, July 25 (Thomson Reuters Foundation) - Leaving the supermarket with enough to feed her family has become an increasingly tough challenge for Brazilian small business owner Andreia Dias Alvares, 42, as food prices shoot upwards.

Earning less than 1,000 reais ($185) per month, below the national minimum wage, Alvares said her only option was to make cuts to household spending, including reducing meal sizes for herself and her two teenagers.

Read more: The Inflation Diaries series

"Prices have practically doubled. For my family, meat no longer enters the house and I started shopping in stores that sell expired products," said Alvares, a single mother from Sao Paulo.

Brazil has been grappling with double-digit annual inflation since September, with consumer prices up by 12% in a year, according to the statistics agency IBGE.

Countries around the world have been facing rising food and fuel costs, largely driven by the impact of the Ukraine war.

In Brazil, lower rainfall has also reduced crop yields and hydropower generation, adding to upward price pressure, said Andre Braz, an economist at Fundacao Getulio Vargas (FGV), a socioeconomic research and education institute.

In Sao Paulo, prices for staple goods such as wheat flour, beans, rice, cooking oil and milk have risen by more than 20% in a year, according to the Inter-Union Department of Statistics and Socio-Economic Studies (DIEESE), a union-founded research organization.

Meanwhile, average earnings nationwide have dropped 7.2% since 2021, said IBGE, indicating the labor market recovery from COVID-19 has been centered in lower-income occupations.

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BUSINESS CHALLENGES

Alvares started a small business making pastries and cakes after she lost her job during the COVID-19 pandemic, but rising costs have eaten into her income.

She has put up her prices by 7% - but her profits are down by 60%.

Despite doing "everything to keep the sales," including absorbing much of the price rises in ingredients and fuel, she says she has lost many customers as they cut back on non-essential spending.

In Rio de Janeiro, Anna Karolyna Mendes and her family also started a food business during the pandemic, selling packed lunches to low-paid street workers like drivers and delivery staff.

They have had to be flexible to stay profitable.

"Everything became more expensive, (so) we had to reinvent ourselves," said Mendes.

"When there's a sale of a specific vegetable, for instance, we buy much more of that product and change the recipes to use the same ingredient."

A year ago, the family shopped at two markets - now, they shop at five.

"For those who work in the streets ... the food we make is cheaper than going to the market on their own," she said.

While Mendes said she believed they could stay competitive and profitable, Alvares is looking at getting a second part-time job to supplement her income.

"I'm very worried," she said. "It's getting more and more complicated to maintain even the basic bills and the situation is snowballing."

($1 = 5.4147 reais)

Explore our interactive map below for more stories about the human impact of the cost-of-living crisis in our three-part series on The Inflation Diaries

More from Part Two of The Inflation Diaries series:

Interest rate hikes add to Polish families' inflation pains

Inflation-weary Zimbabweans forced to find sidelines to survive

Turkish households despair as inflation nears 80%

Tunisians struggle to buy basics as prices rise, economy crumbles

Rising costs leave Spaniards feeling isolated and anxious

(Reporting by Jennifer Ann Thomas @jennyann_thomas; Editing by Sonia Elks. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)
((hugo.greenhalgh@thomsonreuters.com;))

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