Opinion, by Haley White
SANTARÉM, BRAZIL – On International Women’s Day, President Dilma Rousseff announced that the government would eliminate sales taxes for all goods in the Cesta Básica. The Cesta Básica (or “basic basket”) is a list of ITEMS that the government deems essential to a humane standard of living.
The tax cut on Cesta Básica goods will help consumers keep more money in their pockets—it is projected to cause the prices of some goods to decrease by as much as 12.5 percent.
Up here in the north, the tax cut will also hopefully help consumers weather extreme increases in the price of the dietary staple mandioca flour. Mandioca is the principle ingredient in tapioca, a quesadilla-like dish that can be filled with anything from eggs, to cheese, to condensed milk. Its flour is also used to make farofa, that yellow powder sprinkled on feijoada and other entrées.
Over the past year, statistics from the government agency DIEESE show the average price of mandioca flour increased 130 percent in Belém and 173 percent in Manaus, versus 25 percent in Rio de Janeiro. News outlet O Globo reported that prices have risen significantly in the north because of a draught that killed much of the local harvest. They have risen marginally in the south because some southern farmers have sent their crop north to take advantage of the shortage-induced prices.
When I went shopping at the street market near my house last Thursday, I decided to ask the row of mandioca flour vendors how the price increases had impacted them. I expected them all to say, “It’s awful. Our customers are switching to other products.” Instead, they told me, “We’re earning more.”
“How could that be?” I asked.
Alcione, a vendor who would not reveal her last name, walked me through the numbers. A year or two ago, she purchased 60-kg bags of mandioca flour from her supplier for R$80 and resold the contents to customers in the market for up to R$2/kg — her profit margin was about R$0.67. Now, she purchases the same bags for R$300 and resells the contents for R$6. She has increased her profit margin fifty percent to R$1. Framed another way: Alcione and the other vendors have used the confusion about mandioca prices as an opportunity to up their profits.
While Santarém’s vendors are content, its consumers are not. When I went for a cup of coffee after wrapping up my interviews, I told Ed Mara, my waitress, about the article I was writing.
“I used to put mandioca flour on everything,” she said. “Açai, eggs… Now I can’t do that so much… I eat more rice.”
Unfortunately, the price of rice has also risen in some parts of the north. It is up 61 percent in Belém, versus thirty percent in Manaus and 24 percent in Rio de Janeiro.
For my part, I hope that mandioca prices come down soon. Otherwise, my coconut tapioca habit will have to go the same way as my Starbucks habit.
Haley White is a journalist and Fulbright Scholar lecturing at the Universidade Federal do Oeste do Pará in the Amazon. She used to work in business. You can read more of her musings about Amazonian life at haleyelisawhite.wordpress.com.