Abstract: A detailed, large-scale consumer budget survey of Brazil was used to shed light on socioeconomic and serious fiscal policy problems associated with food subsidies. The study measured differences in food intake habits among different regions and income groups as a basis for assessingthe comparative effectiveness of subsidies levied on different food types. Results show that the food commodity selected for emphasis in a subsidy program has a major effect on who benefits and by how much. It is clear that calorie consumption correlated highly with income and that the malnourished adjusted their eating patterns in response to relative price changes in foods. This points out the potentially strong effects of income and pricing policies onnutritional status. In this regard, 2 policy problems are examined: the efficacy of alternative food subsidies in increasing calorie consumption of the malnourished; and the Brazilian government's effort to promote domestic productionof alcohol from sugar cane and other raw materials as a substitute for imported oil. (wz).