In a controversial move, the Luiz Inácio Lula da Silva administration has called off a large-scale multi-million rice auction on June 6, 2024, due to a series of irregularities associated with the winning bidders. The cancelled auction was initially intended for the importation of 263,300 tons of rice, valued at BRL 1.3 billion.
This strategic decision was made in the wake of significant flooding in the southern Brazilian state of Rio Grande do Sul. Recognized as the primary source of approximately 70% of Brazil’s consumed rice, the state’s production and stock losses are still under scrutiny. These catastrophic events have resulted in an unexpected surge in food prices, further exacerbating the nation’s struggles amidst the regional crisis.
According to a recent report from the UN Food and Agriculture Organization, rice prices have inflated by 10% in the last month and by a phenomenal 30% within the past year. Concurrently, statistics from the Brazilian Institute of Geography reveal that rice inflation is currently at an alarming rate of over 25%.
In an effort to curb the rising prices, the National Supply Company (Conab) plans to sell the rice at a fixed price. However, question marks hang over the credibility of the auction winners, with some lacking any experience in the rice-importing sector. From the four winners, only one operates in the field of foreign trade. The others include a cheese vendor, a juice manufacturer, and a car rental firm.
Suspicion heightened as three of the winning firms were represented by entities associated with Neri Geller, Brazil’s Agricultural Policy Secretary. Adding fuel to the fire, it has been found that Geller’s son is also a business partner of an ex-aide to his father. These connections have sparked allegations of insider trading and resulted in opposition lawmakers collecting signatures for an investigative hearing.
In the wake of the ensuing scandal, Geller has tendered his resignation. The fiasco has also led to Brazilian rice producers and representatives from the right-wing opposition filing legal actions to halt the auction altogether. An injunction suspending the procedure was issued by a trial judge, only to be rejected by a superior court.
Despite the government’s assurances of a new auction with more stringent participant vetting procedures, the rural caucus in Congress has applauded the cancellation. The theme of past lessons and present scandals intermingles to illustrate the ongoing fight against corruption and irregularities in Brazil’s agricultural sector.
