ABSTRACT
To what extent will the recent rapid growth in bio fuels benefit the poor in Brazil? The answer depends on whether we examine the rural or the urban poor. The rural poor might benefit from increased demand for sugar cane through their farm production and through increased demand for their labor. Both the rural and urban poor will be negatively affected to the extent that bio fuels cause the prices of basic food commodities to increase. The poor spend a higher share of their income on food than the rich do. When food prices increase, poor families have to spend more to meet a minimum nutritional standard. Bio fuel subsidies lead to lower fuel costs for consumers. However, poor people spend a much smaller proportion of their income on transportation than they do on food in Brazil.
