May 4, 2011
Mercosur deal to affect beef prices in Europe
EU beef prices would be slashed by more than 8%, and meat production across the Union would fall by more than EUR3 billion (US$4.4 billion) 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 2.7-4.2% 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.
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 300,000-tonne tariff rate quota (TRQ) for beef and a TRQ of 250,000 tonnes for poultry and 20,000 tonnes for pork.
This would result in a EUR3billion (US$4.4 billion) cut in the value of EU meat production and knock EUR6.8billion (US$10.1 billion) off total farm incomes.
Under the best case scenario, the initial EU offer in 2004, overall agricultural income would fall by 0.5% but beef production would be cut by 20,000 tonnes and the value of meat production would fall by EUR250million (US$370 million).
Other sectors would also be affected by a Mercosur deal. Under the fourth scenario, skim milk powder production would be cut by 60,000 tonnes and butter prices could fall by more than 7%, although 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, though the intensity of its impact would vary across member states.
