Analysis: beef and sheep farmers lose in EU trade deals

Beef, sheep and poultry producers lose out in trade deals while dairy and pig farmers get a slight benefit, an economic impact assessment of EU trade deals has found.

The science for policy report was carried out by the Joint Research Centre (JRC), which is the European Commission’s science and knowledge service.

In the case of beef, it is the Mercosur trade deal that presents the greatest threat to beef producers. Mercosur countries are projected to account for an additional €432m of value in EU beef imports out of the additional €529m or €467m total additional EU beef imports, depending on whether it is an ambitious or conservative trade deal.

The other big winner would be Australia. If that trade deal is concluded – it would gain an additional €33m of exports to the EU in a conservative trade deal and up to €100m in an ambitious trade deal.

New Zealand is expected to gain an additional €46m of beef exports to the EU in either a conservative or ambitious deal.

On volume, depending on whether it is a conservative or ambitious deal, the assessment is that the EU will import between 81,000t and 91,000t more beef with the trade deals, the vast majority of which will come from Mercosur countries.

The consequence for EU farmers is a forecasted fall in beef prices of 2.4% and a drop in production of 0.9%.

A 2.4% drop in value translates into €42/head on an average 350kg Irish bullock at current prices of around €5/kg.

EU sheepmeat imports are expected to increase from €569m to either €607m with a conservative trade deal or €630m in value with an ambitious deal.

This does not include trade with the UK, which has a special trade and co-operation agreement with the EU since the UK left the EU.

The main beneficiary is expected to be Australia which is forecast to grow its sales to the EU from €29m to either €68m or €94m, depending on conservative or ambitious deals. This will be primarily at the expense of New Zealand, which has already unfilled quota for sales to the EU.

On volume, sheepmeat imports are forecast to increase by either 3.5% or 4,000t in the conservative scenario, and 5.3% or 6,000t in the ambitious scenario.

The impact assessment estimates that this would cause a price hit of either 1.9% or 2.7%, which amounts to between €3 and €4.27 per 22kg lamb depending on scenario.

Dairy and pigmeat

EU trade deals are forecast in the impact assessment to benefit the dairy sector with exports increasing by 40% or €669m in a conservative trade deal scenario and 51% or €844m in an ambitious trade deal.

The only significant import impact for the EU is in the trade deal with New Zealand, which is forecast to increase imports by €176m.

Farmers would be expected to benefit with a 0.1% increase in milk production and a 0.4% increase in prices or €323m by 2032.

Pigmeat exports are also forecast to increase, up 5.4% in value or €566m in the ambitious scenario and a further 118,000t of pigmeat exported.

This would lead to a 1.3% price increase in the ambitious scenario and a 0.4% expansion in production.

Trade deals are divisive, even among farmers, with only beef, sheep and poultry producers really losing out.

In the wider economy, trade deals are generally beneficial for the EU including Ireland with car, pharma and technology sectors all standing to gain. That means when it comes to ratifying the Mercosur deal with the South American countries of Argentina, Brazil, Uruguay and Paraguay, it particularly hits Irish beef producers. We cannot be sure that the Irish Government will oppose it despite the negative impact on Irish beef producers.

The great barrier to Mercosur ratification has been a concern across the EU about the environmental policy in South America, especially rainforest clearance in Brazil in the years following the agreement with Mercosur countries in 2019.

This caused consternation in the European Parliament where ratification would almost certainly have been voted down.

However, with new political leadership in Brazil since the start of last year, this deal is likely to be back on the table after the EU elections and appointment of a new European Commission later this year. This is the deal that Irish farmers need to watch most.