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PARAGUAY: Women’s Cooperative Buys in Bulk to Beat Food Inflation

David Vargas

ASUNCION, May 21 2008 (IPS) - Making the old saying “cheaper by the dozen” their motto, a group of women in a poor neighbourhood of Asunción created a cooperative to buy food in bulk, in order to combat the rise in food prices.

Mujeres Unidas leaders Ramona Pérez, Petrona Pereira and Benigna Román. Credit: David Vargas/IPS.

Mujeres Unidas leaders Ramona Pérez, Petrona Pereira and Benigna Román. Credit: David Vargas/IPS.

The 56 members of the Mujeres Unidas (Women United) cooperative in the district of Limpio, on the outskirts of Asunción, each pay a monthly fee of 110,000 guaranís (around 25 dollars). The food purchased with the money is then distributed equally among all of the members.

The cooperative was created in 2006, when the first effects of global food price inflation began to be felt in Paraguay. That year, the cost of the products making up the basic consumer basket of goods rose 26 percent, according to the Central Bank of Paraguay. And in 2007, prices rose 40 percent, while overall inflation went up 12 percent over the last 12 months.

Once a month, the women organise a shopping trip to the big markets on the edges of the capital, 10 km from Limpio, where they shop around for the lowest prices, look for products that are on sale, and bargain with shopkeepers and vendors.

“The prices are sky-high,” Ramona Pérez, president of Mujeres Unidas, told IPS, throwing up her hands in a gesture of desperation. “The only way to ease the impact on our pocketbooks is by buying in bulk.”

The main products purchased by the women are staple foods like rice, sugar, cooking oil, flour, eggs, beans, salt and yerba mate tea (a traditional infusion). And “if there’s money left over,” they buy additional products like vegetables and soap, said Pérez.

She said beef and dairy products are not included on their shopping list because they are too expensive. “It’s exasperating how much prices have gone up, and the fees we pay no longer stretch far enough,” she complained.

The food shortages are affecting all sectors of society in Paraguay, but they hit the poor the hardest, according to a report by three United Nations agencies.

The “Invertir en la gente” (Invest in People) project, carried out by the United Nations Development Programme (UNDP), the United Nations Children’s Fund (UNICEF) and the United Nations Population Fund (UNFPA), reported that the rise in food prices pushed 270,000 Paraguayans into extreme poverty last year, and could do the same with another 140,000 this year.

The extreme poor are those who are unable to afford an adequate diet.

According to the study, if food price inflation amounts to 20 percent this year, the extreme poverty rate will go up from the current 19.4 percent – equivalent to some 1.3 million people in this country of 6.2 million – to 21.3 percent.

According to the Central Bank, inflation in the first four months of the year was 4.4 percent, 1.4 percent higher than in the same period of 2007.

“Food prices explain 65 percent of the inflation seen in April, which is part of an international phenomenon. To that is added the rise in the prices of petroleum products,” said Miguel Mora, director of the Central Bank’s domestic market division.

The rise in extreme poverty represents a setback with respect to the commitment assumed by Paraguay to cut the rate to eight percent by 2015, in order to meet the target set by the Millennium Development Goals (MDGs) adopted by the international community in 2000, which is to halve the proportion of the population living in extreme poverty, from 1990 levels.

“Our prediction is that things will only get worse, because food production costs are on the rise,” Julio Fernández, coordinator of the “Invertir en la Gente” project, told IPS.

The increase in international prices of oil – which Paraguay does not produce – and agricultural inputs, added to shortages of some food products, like rice from Brazil, and the ongoing conflict between farmers and the government in neighbouring Argentina over a tax on grain exports, combine to form an explosive cocktail, whose consequences will affect the entire economy, said Fernández.

Paradoxically, the rise in extreme poverty has gone hand in hand with exceptional growth of the Paraguayan economy, which last year grew 6.8 percent, the highest rate in 26 years.

In the 1970s and early 1980s, the construction of the enormous Itaipú hydroelectric dam built by Paraguay and Brazil was the main factor fuelling growth, which peaked in 1981, when gross domestic product (GDP) expanded 9.2 percent.

The chief elements in the country’s current economic growth are the expansion of soy exports (Paraguay is the world’s fourth-largest producer of soybeans) and beef, as well as the growth of the construction industry and the communications sector.

Unemployment has also gone down over the last year. The 2007 household census by the General Office of Statistics, Surveys and Censuses found that the unemployment rate dropped from 11.1 percent to 8.5 percent.

“But this auspicious scenario was counteracted by the steady increase in food prices, which eroded a large part of the incomes of the extreme poor,” said Fernández.

Families living in extreme poverty dedicate more than 70 percent of their incomes to food, a proportion that grows along with food prices.

The study by the U.N. agencies concluded that growth combined with high levels of inflation “is not a desirable combination.”

The statistics bear that out. In 2004, 4.1 percent GDP growth accompanied by virtually zero inflation in food prices helped reduce extreme poverty by three percent.

The following year, 2.9 percent GDP growth, with a 5.5 percent rise in food prices, brought a 1.6 percent reduction in extreme poverty.

But last year, a historic rise in GDP combined with high inflation led to a four percent increase in extreme poverty.

This scenario, although it benefits producers, generates worries among consumers, whose buying power is shrinking as a result.

The members of the Mujeres Unidas cooperative in Limpio are all too familiar with the phenomenon. They recently had to increase their monthly fees from 100,000 to 110,000 guaranis, just to be able to buy the same amount of food they were already purchasing.

The women are now taking a bakery course, in order to produce their own bread and other baked goods. They have also contacted fruit and vegetable growers, to purchase fresh produce from them directly, without having to go to the markets.

“That’s the only way we can survive,” said Pérez.

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