Have you ever wondered what really drives food prices? Some situations, such as high inflation, an energy crisis, a war in Eastern Europe, and even weather conditions, can be decisive factors in the final price of food. O BUT+ talked to some experts to better understand what affects the price of food before it reaches the supermarket.

High inflation, the energy crisis, the war in Eastern Europe and even the weather can be decisive factors in the final price of food. Photo: Edu Garcia/R7/Disclosure/ND

We used rice and beans as an example, since this pair is a world famous dish that is eaten by almost all Brazilians.

However, many people do not know why the average price of both rice and beans has changed significantly in recent months.

Bean production in Santa Catarina is mainly focused on the domestic market. The formation of its price depends on several factors, such as: different varieties of beans; shelf life – new grains (recently harvested) are valued more; product quality – first harvest beans offer the market a higher quality product than second harvest beans, and demand – during school holidays and New Year holidays, demand for the product drops sharply.

Production in two seasons

Bean production in Santa Catarina consists of two crops. The first, called water harvest (1st harvest beans), accounts for about 60% of production, and the second harvest, also called dry harvest (2nd harvest beans), accounts for 40% of the total state production.

For Santa Catarina, the sowing period for 1st crop beans is from August to December, and for 2nd crop beans from January to March.

The first harvest usually produces a product of higher quality and added value, so it tends to have a higher price. Beans from the last harvest tend to be less valuable and slightly cheaper.

Farmer Celeste Slabisky owns property in Itiopolis, in the Northern Plateau region of the state, where he has been growing beans for over 35 years. Together with his family, he grows seeds on an area of ​​80 hectares (approximately 80,000 m²).

Slabisky says that although it is extremely manual and tedious work, it is a lot of fun growing seeds and contributing to Santa Catarina’s GDP. The producer, with the help of his son, harvests about 300 tons of beans per year in both crops.

Influence of inputs

The cost of raw materials also affects the final price of the product. Celeste explains that production costs start even before the planting. The grower notes that he needs to prepare the soil for seed production, using herbicides to keep the soil clean.

Celeste Slabisky’s property requires about 720 liters of herbicide to be planted, which requires three to four treatments per crop.

Plantation of beans in the ripening phase, about 20 days after planting. – Photo: Pixabay/Disclosure/ND

The producer also uses about 900 kg of fertilizer per crop. Considering that the average cost of a kilogram of fertilizer is about 19 reais, the final amount affects the price. Another detail concerns post-seeding fertilization where Celeste uses about 80 60kg bags per harvest.

Pesticide packaging has a high potential for environmental pollution – Photo: Disclosure/ND

Also, according to Slabisky, the largest cost, in addition to fertilizers, is diesel fuel, a necessary raw material for the movement of agricultural machinery during sowing, at the stage of spraying with herbicides and fungicides, and during harvesting. Diesel also affects the cost of transporting the product to the cooperatives that negotiate the product, and therefore the final cost of the seed.

Final consumer price

Comparing the 2012/12 harvest with the 2021/22 harvest, in this nine-year window we see that there has been a systematic reduction in planted area, which has decreased by 26.2%.

On the other hand, productivity increased by 6.6%, which contributes to the fact that the shortage of products is not greater, and prices remain stable.

João Rogerio Alves, socioeconomic analyst at Epagri/Cepa, says production of the 2022/23 first crop beans will be more expensive as production costs have risen significantly.

Comparing July 2022 with July 2021, it can be seen that the link’s total operating costs were 24.68% higher, driven by significant increases in fertilizers (47.22%) and pesticides (27.39%).

In his opinion, this is a product that has a short shelf life in ownership, that is, the producer, as soon as he collects the product, needs to sell his products on the market, since the quality of the grain quickly depreciates over time. time, compromising the value gained from a commercial product.

These characteristics of the product put beans at a disadvantage compared to products that have a quality standard, more stable prices and a consolidated international market. As a result, the worrying fact is that every year legumes are losing ground to crops such as soybeans and corn.

rice culture

To address the cost of rice, we spoke to Rogerio Pessi, a rice grower with over 30 years of experience in Ararangua, a city south of Santa Catarina. His 75 ha (approximately 75,000 m²) property yields around 480 tons of seed per crop harvested between January and May.

Rice, like beans, also allows you to grow and harvest more than one crop per year. On well-prepared land, with the right technique, up to three crops per year can be obtained, the last of which with seeds of slightly inferior quality.

Pessy notes that the main impact on production costs is directly related to fertilizer costs. The rice farmer also highlights the high cost of production due to the cost of diesel and electricity, as the rice requires constant irrigation.

Rice requires constant watering, it needs very moist soil for a good harvest. – Photo: Freepik/Disclosure/ND

As for diesel fuel, we can highlight the current price of a barrel of oil at $99.49 per barrel (approximately R$489.45), which is a significant increase in a short period of time.

In this context, we should note that, unlike gasoline, diesel fuel has grown exponentially, and there has not been a significant reduction in the price at gas stations.

Rogerio also points out that the rice producer is not confident in the market because seeds are not yet recognized as agricultural commodities, such as coffee and soybeans, which have more regulated prices in the external market and are less volatile.

The largest rice grown in Santa Catarina is Epagri’s, known as Cultivares Epagri SCS-125. Seeds account for 82% of the state’s cultivated area, equivalent to 120,000 hectares cultivated throughout Santa Catarina.

Rice harvesters in Ararangua, South Carolina Photo: Rogério Pessi/Disclosure/ND

Cost impacts are also related to weather conditions. Drought and excessive rains cause seeds to lose quality and thus depreciate heavily in the domestic market.

João Rogério Alves also emphasizes that we cannot ignore that large price fluctuations in the market make the grower uncertain about what to plant and how much. This fact also affects the final cost, when you plant in large quantities, there is more product on the market, so the final cost decreases.

A survey conducted by the CNA (National Confederation of Agriculture) provided some data that better show us this scenario: urea increased by 300% compared to last year.

Phosphate increased by 100%, from $400 to $800 per ton, while potash increased by 170% and decreased from $290 to $780 per ton. All components mentioned above are part of the fertilizer chain.

The most expensive rice in 2023

But even grower Rogério Pessi says the biggest impact on consumers will be in the next crop: the rice sown now, which will be harvested in mid-February, could see a bigger gain. According to the manufacturer, “growing this crop is very expensive.”

According to Fetaesc (Federation of Farm Workers of Santa Catarina) Administrative Director Agnes Sipanski Weivanko, the cost is due to the high cost of agricultural inputs for planting, which include fertilizers, pesticides and fungicides.

Another detail Agnes noticed was the cost of planting and harvesting equipment. For example, she emphasizes that for growing rice and beans, equipment must be modern in order to adapt to market requirements. For example, a harvester can cost more than 1 million reais, about a year ago this equipment was bought for less than 600 thousand reais.

With all the information above, we can conclude that the rise in the prices of these products is supported by several factors: the main one is indeed the rise in the cost of fertilizers. Another observable point is the high cost of diesel fuel, which drives Santa Catarina’s agricultural equipment, and, finally, market demand and supply.