Most EU states approved the deal in spite of fierce opposition from France, Poland, Ireland, Austria, and Hungary. Despite the sweeteners for the farming sector including redirecting €45 billion from the next EU budget towards agriculture and proposals to have additional safeguards to avoid strong decreases in EU prices of agricultural products, many European farmers fear it will flood markets with cheaper South American agricultural imports produced under lower environmental, sanitary, and labour standards, undercutting local producers.
“Despite the latest adjustments to the additional safeguard measures, European farming and agri-cooperative organisations remain unanimous and united in denouncing a deal which remains fundamentally unbalanced and flawed in its core,” farmer group Copa and Cogeca said after the vote on Friday. “This deep conviction only strengthens our determination and mobilisation.”
Will competitive pressures accelerate innovation?
There is small chance that the several protests planned across Europe could see the deal tweaked to include direct support to farmer incomes or subsidies schemes for agri-inputs and/or agricultural investments, points out ING analyst Thijs Geijer. “Ruling coalitions and politicians in the countries opposed to the deal could also face more backlash at national level,” he said. “One example is proposed no-confidence votes against the Macron administration in France.”
A further squeezing of farmers’ margins will likely lesson their ability to finance new machinery, digital tools, or precision equipment and rely more on costly or hard‑to‑obtain credit as farmers seek to stay viable against cheaper competitors.
Pesticide protocols
But Geijer believes there are areas in the deal that could potentially provide opportunities for the European agtech ecosystem. “Pesticide compliance is becoming a more important topic and that might provide opportunities for EU companies that provide solutions or advise to Mercosur exporters,” he said.
He notes there is already a push from France and the Commission for stricter regulation on imports with traces of some certain substances (including carbendazim, benomyl, and thiophanate-methyl) with a Commission proposal expected in February. The import control trend is towards more checks at point of entry (like the port of Rotterdam) and controls in producing countries.
In addition, when EU beef and soy imports from Mercosur rise because of the deal, Geijer expects there will be some additional demand for deforestation tools that help companies to ensure that these imports are deforestation free.
