Farm Ireland

Friday 15 December 2017

Mercosur deal to hit beef prices

Declan O'Brien

Declan O'Brien

EU beef prices would be cut by more than 8pc and meat production across the Union would fall in value by more than €3bn if a deal were agreed with South American trade group Mercosur.

These were the stark findings of a preliminary assessment of a trade deal carried out for the agriculture arm of the commission and presented to member states last week.

At a local level, the study found that Irish farm incomes could be reduced by 2.7-4.2pc as a result of a trade deal.

Four possible scenarios were considered for the study:

1) The EU 2004 offer;

2) The EU 2004 offer and the EU concessions at the Doha round of world trade talks;

3) The Mercosur request of 2006;

4) The Mercosur request of 2006 and the EU concessions at the Doha round of trade talks.

Also Read


The fourth of these was easily the worst scenario for European farmers as the sector would be hit with significant increases in meat imports from the South American trade bloc, which includes Brazil, Argentina, Paraguay and Uruguay.

This scenario would see Mercosur granted a 300,000t tariff rate quota (TRQ) for beef and a TRQ of 250,000t for poultry and 20,000t for pork.

This would result in a €3bn cut in the value of EU meat production and knock €6.8bn off total farm incomes.

Under the best case scenario, the initial EU offer in 2004, overall agricultural income would fall by 0.5pc but beef production would be cut by 20,000t and the value of meat production would fall by €250m.

Other sectors would also be affected by a Mercosur deal. Under the fourth scenario, skim milk powder production would be cut by 60,000t and the butter price could fall by more than 7pc. The impact was less severe under the other scenarios.

However, the study accepted that the overall impact of a possible EU-Mercosur trade deal was negative and the intensity of its impact would vary across member states.

Meanwhile, an assessment of a trade deal on behalf of the trade arm of the commission found that there would be a net gain for the EU, with car manufacturers, telecommunications firms and service providers being the big winners.

EU Trade Commissioner Karel De Gucht has indicated that he will be ready to table an offer to Mercosur within the next two months.

EU officials are meeting with their Mercosur counterparts in the Paraguayan capital Asuncion later this week.

Agriculture Commissioner Dacian Ciolos has pledged to keep member states informed on the talks and that they will see any offer before it is tabled.


Minister for Agriculture Simon Coveney described the assessment of the Mercosur deal as "quite shocking".

"Ireland cannot allow the Irish and European agri-food sectors to be sacrificed to get a trade agreement," he said.

Mr Coveney called for the commission to produce a full impact assessment of a Mercosur trade deal as a matter of urgency.

IFA president John Bryan said the EU Commission's assessment of a Mercosur trade deal seriously underestimated the hit on Irish and European agriculture.

He said the commission's estimate of losses of €3bn had little credibility against the European farmers' union's, COPA, own assessment, which estimated losses at closer to €30bn. Mr Bryan challenged the commission to explain the difference.

Irish Cattle and Sheep Farmers' Association president Gabriel Gilmartin said the commission's study provided stark evidence of just how damaging a deal could be.

Indo Farming