Mercosur is a term that is increasingly part of the conversation in farming and in sucklers in particular. It is the name given to a group of South American countries that are among the largest beef exporters in the world and also have the cheapest beef of all the major exporters. The members include Brazil, Argentina, Uruguay and Paraguay (Venezuela is currently suspended).

They came together in 1991 in a model loosely based on the EU but are nowhere near as unified, with member countries retaining autonomy in several areas that are dealt with centrally in the EU on behalf of member states. Discussions on a free-trade agreement started with the EU in 1999 and have stopped and started several times since.

The most recent attempt began with the election of a free-trade president in Argentina late in 2015, replacing a protectionist president who imposed export tariffs on agricultural produce including beef.

Pressure for a deal

With the EU beef market delicately balanced between production and consumption, a surge in supply from a Mercosur trade deal would tip the balance in a disastrous way for Irish farmers.

Already an offer of a 70,000t quota has been made to the Mercosur countries by EU negotiators. It is expected that if the EU was to get the level of access they want for cars, car parts, other industrial goods and pharmaceuticals, they would increase this to 99,000t. In effect, the EU trading beef for BMWs would be a disaster for Irish and EU beef producers.

The problem is that a beef quota isn’t for a full beef carcase. At least half the quota is intended for high-value cuts.

The EU market is the most valuable high-volume steak meat market in the world, and therefore this quota would be filled with steak meat from up to 1m cattle which is more than half the entire Irish annual kill.

Considering that the current Brazilian beef price is around the equivalent of €2.25/kg, we can expect a devastating impact on EU prices and serious displacement of Irish and EU product.

Importance of Brexit

Brexit is a huge threat to the Irish beef industry in its own right because 270,000t, over half our production, is sold in the UK annually. A potential trade deal with the Mercosur countries would make an already once-in-a-lifetime disaster for the Irish beef industry even worse.

In the worst-case scenario, where the UK is effectively closed off to Irish exports because of WTO tariffs, the next destination for this displaced Irish beef is other EU countries.

Accommodating this would be a huge problem but the problem would be doubled if, at the same time, the EU 27 beef market was subjected to a huge delivery from South America.

If this perfect storm were to occur, it would decimate the EU beef industry and in the process the specialised Irish suckler industry. Saving our sucklers means not trading beef for BMWs.