Opinion: Mercosur migraine hits government honeymoon before wedding

Governments don’t expect to get honeymoons that last months. Something usually comes along fairly quickly to put political pressure on a new administration.

The more auction politics parties had engaged in during the campaign that saw them elected, the quicker one of those expensive chickens is likely to come home to roost.

If Fianna Fáil and Fine Gael lead the next Irish government - as seems inevitable - they can’t really expect any honeymoon.

This is a remarriage, not some blushing bride and gormless groom heading up the aisle as innocents (if that ever happens anymore or if it ever happened at all).

Fine Gael have been in government since 2011, so blaming a previous administration for any issue presenting itself in 2025 is not going to wash.

And Fianna Fáil ran the country from 1997 to 2011 and have been effectively in coalition with Fine Gael since 2016, so they can’t point the finger either.

Farmers’ expectations of the new government will have been raised by the extraordinary sums of money pledged - the low bid was Fine Gael’s €30 per ewe, €300 per suckler cow, €100 per dairy calf and €60m a year for tillage farmers.

Fianna Fáil went further, pledging €35/ewe, €350/suckler cow, €100/dairy calf and €60m a year for tillage.

I think you will now see pressure from farm leaders for government to itemise the introduction dates for these increased payments.

But first, of course, there is the small issue of Ursula von der Leyen’s little trip to Montevideo….

Mercosur the first challenge

Mercosur is the first issue on the incoming government’s plate in terms of agriculture. Or perhaps more accurately, it’s the last issue on the outgoing government’s plate.

The announcement made by Ursula von der Leyen on Friday will have repercussions for years, both economically and politically, for Ireland’s farmers and their relationship with both government and the European Commission.

In a way, the timing of the deal is fortuitous for Fianna Fáil and Fine Gael. Acting Taoiseach Simon Harris and outgoing Minister for Agriculture Charlie McConalogue can fulminate at the chicanery that has seen an announcement in Montevideo in 2024 that is basically a restating of the 2019 deal,with a couple of environmental restrictions thrown in.

But if we have a new agriculture minister and a new Taoiseach (well, Micheál Martin again) in January, will they be able to claim “it was like this when I got here”?

The big question is how effective can any opposition from an Irish government be?

The big question is not really whether the election campaign pledges from all sides to oppose a Mercosur deal will hold. The big question is how effective can any opposition from an Irish government be?

There are only a couple of routes open to stopping the deal. The first is by forming a coalition of member states that contain at least 35% of the EU’s population. That’s quite an ask - there are 449,206,600 people in the EU in 2024, according to Eurostat.

You need countries with a combined population of 157,222,310 to form a blocking minority. Ireland’s population is reckoned at 5,383,800, not even 4% of what is required.

We need three of the bigger nations on board. France and Italy are both making all the right noises at present, but they still need members states with about 30,000,000 people to get to the required threshold.

The powerbroker in all this might well be Giorgia Meloni, the Italian prime minister. The German government is weak. Michel Barnier has just been deposed as French prime minister and president Emmanuel Macron is holding on to power by his fingernails.

But Meloni’s stock has never been higher. While she is often described as far-right - and certainly has some views that are on that end of the spectrum - she has also shown the capacity to be pragmatic.

She also has a good relationship with the incoming US administration - and Donald Trump. Her reaction to the Mercosur deal being signed was that “adequate safeguards and compensation” must be available for farmers. But who defines adequate?

The other option is for a majority of the European Parliament’s 720 MEPs to vote against ratifying the deal. Again, it’s a tall order.

Von der Leyen’s own EPP contains 188 members, so in theory she is already halfway to a majority. Ireland’s Fine Gael MEPs - Nina Carberry, Regina Doherty, Sean Kelly and Maria Walsh - are in that EPP group; will they have to choose between the stance of their Irish party and their European one?

Why Ireland is so exposed to Mercosur

As a country that exports the vast majority of the beef we produce, we are more exposed to an influx of high-quality cuts of meat from Brazil, Argentina, Uruguay, Paraguay and Bolivia - the five full Mercosur members.

And be of no doubt, the extra 100,000t beef quota allocation will be filled by steak cuts - there won’t be any stewing beef involved.

This will mean a disproportionate effect on the price of high-value cuts of cattle meat.

The next big question is what effect that will have on overall farmgate beef prices. In the short term, it wouldn’t be too dramatic, as global beef supply is limited and prices are buoyant outside Europe, as well as inside it.

Will those restrictions make any material difference to the amount of beef coming in from Brazil, Argentina and Uruguay?

I doubt it to be honest. Do they make it harder for the Irish government to create or maintain an alliance of EU member states to block the deal? They absolutely do.

Fly in the ointment

There is one other considerable fly in the ointment for the Irish livestock sector. They are opposed to the importation of Brazilian beef into the EU on the environmental stance that it has been fed on crops grown on ground that has been deforested.

How then can they be in favour of the importation of animal feed from the Mercosur countries to feed their own livestock? Where do people think the maize and soya Ireland imports from South America is grown?

Preventing the importation of beef from South America might maintain European beef prices. The flipside is that could indirectly result in the prevention of importation of animal feed from South America, which would increase costs and erode margin.

Nobody ever said this would be simple.