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Food industry says room to absorb cost is limited, calls for tax cut

The food industry says its ability to absorb costs is limited and, to ease prices, suggests tax cuts and investment in infrastructure. The position was released in a note by the Brazilian Food Industry Association (Abia), a day after President Jair Bolsonaro and Economy Minister Paulo Guedes asked for “the lowest possible profit” from the supply chain.

In a note, Abia — an entity that represents the major food manufacturers in Brazil — says that “the rise in food prices is not just a matter for the Brazilian market, it is a global phenomenon”. When citing the effects of the war in Ukraine, manufacturers cite data from the International Monetary Fund that indicates that the world is experiencing the biggest wave of inflation in food in 100 years.

“After more than two years of successive increases in production costs, the food industry’s ability to absorb costs is limited. Raw materials, packaging and energy represent 60% of the cost of food production, and the highs of these inputs generate reflexes in all links of the production chain”, quotes the association’s note.

Abia suggests that the industry could operate in a more favorable environment with a positive impact on prices with the reduction of taxes. The text cites some of the raw materials that could benefit, such as palm oil, wheat gluten, packaging materials, electricity and fuel.

“The temporary reduction in the import tax on packaging materials and inputs, such as palm oil, can contribute to guaranteeing domestic supply, minimizing the impact on production costs and on the final value of food”, completes the note from Abia.

The note also mentions the need for investments in infrastructure.

“These are some factors that can contribute to more efficient production, with greater job creation and tax collection, reducing pressure on production costs and which can reflect on the final price of food,” the note says.

The text also mentions that it is “fundamental – and urgent – ​​to adopt government measures to expand the availability of raw materials essential for food production”.

Among Abia’s associates, according to the entity’s website, are the companies Arcor, Camil, Coca-Cola, Danone, Dr. Oetker, Hershey’s, Kellogg’s, Mars, McCain, Mondelez, Nestlé, Seara, Unilever and Vigor, among others.

Source: CNN Brasil

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