European and South American leaders have convened in Uruguay to finalize the controversial EU-Mercosur deal, a free trade agreement that will create a new open market for almost 800 million people. But many European producers are fearful that cheaper, lower-quality products will flood the market, damaging livelihoods and the global climate. 

Protests have erupted in Poland and France, with farmer unios blocking ports and motorways and pledging to cause as much disruption as needed to block the agreement. But what threat does the deal really pose to the industry and consumers?  

First conceived in 1999, it would lower tariff rates and encourage cooperation, making it the biggest trade deal struck in the history of both the EU and Mercosur countries (Argentina, Bolivia, Brazil, Paraguay and Uruguay).

The annual trade volume is estimated by the European Commission (EC) to be around €45 billion (US$47.6 billion). The EU is already the biggest foreign investor in Mercosur, with a stock of €330 billion (US$317 billion) in 2020.

However, the bloc’s agricultural sector is voicing fears that a massive influx of cheap meat and wine products will priceout local competition. Consumers could also be exposed to produce made under lower regulatory standards, including more lenient use of GMOs, pesticides and poorer animal welfare requirements. 

Irish Farmers Association (IFA) president Francie Gorman, also vice president of the European farmer representative body COPA, says: “This deal is the height of hypocrisy. There will be no level playing field for EU farmers. Our markets will be undermined by cheap imports produced to lower standards.” 

“If this deal is concluded by the EC, it will need to be approved by the EU Council of member states wher there is still significant opposition to any deal being concluded.” 

Burdens on beef and poultry 

A main area of concern is for the beef and cattle sector, which could be highly vulnerable to trade from large producing nations such as Brazil and Argentina. 

IFA says the EU beef and poultry sectors will be “decimated” by increased imports of tariff-free beef and poultry, as Mercosur countries have a competitive advantage due to their lower production regulations and standards.

A 2021 study showed that Brazil exported 1.9 million tons of beef in 2021 at prices 20–30% lower than European production. IFA also points out the absence of a robust tracing system for suppliers of beef cattle from Brazil to the EU market. 

Besides bringing substandard produce into the European market, the deal could also worsen an already difficult situation for farmers. In 2022, 20% of European farms reported financial losses. 

According to the IFA, the deal’s tariff-free quota of 99,000 tons of beef would equate roughly to 18% of current EU beef production. Moreover, any Brazilian imports are likely to be high-value cuts such as steaks, further deepening the impact. However, others point out that this only equates to a fraction of the almost 7 million tons of beef consumed by Europeans each year. 

The current agreement also includes a tariff-free quota of 180,000 tons of poultry meat, primarily chicken breast, equivalent to 1.2 billion fillets. The EU already imports over 400,000 tonnes of poultry meat from Mercosur countries annually. 

Wine liquidity 

Another F&B market set for significant impact by the deal is the wine sector. Ignacio Sanchez Recarte, secretary general at Comité Vins, which represents European wine businesses, tells Food Ingredients First the agreement is a positive development. 

“Today, with a 27% customs duty and several technical barriers to trade, it is difficult for EU wines to invest in the wine market development. Without these limitations, we could expect EU wine to increase its market share and increase, thanks to its investments and the size of the wine market.” 

“We have seen impressive development of EU wine exports (rounding even 25%) in markets wher the EU has achieved a Trade agreement, and there is no reason to think that the same positive evolution will not happen this time with Brazil.”

Recarte also claims the deal could help push the EU’s alcohol market out of a struggling period. “Wine is going through a difficult moment, with changes of consumer habits, a structural decline of wine consumption in traditional wine markets and international geopolitical tensions,” he says.

“EU Mercosur agreement will not be a silver bullet that will solve all of our problems, but, in the short and long term, it is an absolute necessity to get his deal to diversify our markets and get new consumers.”

Jean Lhéritier, a senior figure in the Slow Food movement, disagrees, saying the impact on local producers will be far different: “Chilean and Argentine wines are already a strong challenge for our producers. With the Mercosur free trade agreement, it will be worse. They don’t face the same restrictions on pesticides or adhere to the same health standards.” 

“This would worsen unfair competition and environmental damage.” 

Environmental threats

The prospect of an open trading area connected to regions with different environmental standards could also threaten the F&B industry’s footprint in both blocs. 

The Veblen Institute Institute for Economic Reforms estimates the deal could increase annual deforestation in the Amazon by 25%, a region already under pressure from intensive agriculture and cattle ranching. 

Greenpeace estimates it could also generate an additional 340 million tons of CO₂ over the next decade — nearly equivalent to Spain’s annual emissions.

The content of the final agreement has yet to be made clear, and support from the EU is also uncertain, as four or more states could block the vote. Pressure on both market areas arising from the threat of new US tariffs imposed by the Trump administration may also motivate politicians as the talks continue.