News Mercosur and Brexit
Large supply of beef threatens due to trade deals
Together, the Mercosur agreement and Brexit could increase the supply of beef on the European market by 7 to 10%. That is according to Danish Crown. Full access to important export markets and quick access to China are now essential, according to the Danish meat company.
The program trade agreement between the EU and Mercosur opens up the European market to the South American countries of Brazil, Argentina, Paraguay and Uruguay. An annual quota of 99.000 tons of beef has been agreed in the agreement. By comparison, the EU currently imports about 300.000 tons of beef per year. It has also been agreed that the import tariff will be reduced from 20% to 7,5%.
5 to 6% of production
Danish Crown notes that the quota corresponds to 1,3% of European beef production. When the trade agreement is fully implemented in the coming years, total beef imports will amount to 5 to 6% of production. In addition, the import of 180.000 tons of poultry meat and 22.000 tons of pork also affects the price of beef in the EU.
“In general, it is positive that the EU is concluding trade agreements. As a result, export-oriented Danish agriculture can have free rein with different countries,” says Karl Christian Møller, chief analyst at Danish Crown. The Mercosur deal, however, is an exception.
Brexit also plays a role
“At the moment it is difficult to predict what the treaty will really mean,” added Finn Klostermann, CEO of Danish Crown Beef. “The United Kingdom currently imports relatively large volumes from the Mercosur countries, so the outcome of the Brexit negotiations also plays a role. In addition, the agreement must first be approved by all 27 EU countries, so it will be phased in over a period of seven years.”
Britain could, after withdrawing from the EU, choose to import more meat from South and North America at the expense of Irish beef in particular. According to calculations by the UECBV (the European Meat and Livestock Industry Association), this could lead to higher quantities of Irish beef in the internal market (300.000 tonnes). The Mercosur agreement and Brexit will thus be able to increase the supply of beef in the European market by 7 to 10%, Danish Crown says.
Quick Access to China
According to Møller, there is now an urgent need for the beef sector to have full access to areas where the EU has trade agreements. “And last but not least: quick access to China. Imports of all types of meat there will increase in the coming months as a result of the African swine fever.”
Jeanette Pennings
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