Brussels, 29/04/2004 (Agence Europe) - COPA, which represents agricultural organisations, is rallying against the agricultural concessions that the European Union is preparing to make for Mercosur in the context of the free trade agreement under negotiation. Peter Gaemelke, COPA President, states that preferential access to the European market for countries that are among the largest operators in the trade in agricultural products worldwide would not only threaten the European agricultural model but would also prevent the most disadvantaged countries in the world from benefiting from trade. The organisation backs his stance on a long analysis of farm production in the Mercosur countries in the most sensitive areas. COPA recalls that from Argentina, Brazil, Paraguay and Uruguay comes all produce that grows in temperate or tropical climates and that their reserves of productive land are considerable (100 million hectares in Brazil). Also, he insists, in Brazil the costs of production are 30% lower than in the EU for pigmeat, for example. In addition, within Mercosur, constraints are far from being as strict as they are in Europe when it comes to health measures, environmental protection and animal welfare, he said.
In the wheat sector, COPA stresses that Mercosur is a competitive net exporter with production costs that are among the lowest in the world and hence a competitive monetary advantage. Although Brazil is one of the three largest world importers, Argentina is one of the five largest exporters, increasing from 7.5% of the world market in 1995/1997 to 10.2% in 2000/2002. The EU/Mercosur agreement would present a risk in the animal feed sector, COPA believes, fearing that South American maize could take the place of European fodder corn.
In the maize sector, Brazil and Argentina ensure 9% of world production and covered nearly 20% of world exports between 2000 and 2003. Brazilian production was essentially turned toward internal consumption, but has increased by 30% in 10 years and still has major productivity reserves, COPA states. The two countries currently represent 80% of imports and 5% of maize consumption in EU15. COPA considers that, with enlargement, balance of the corn market will be changed as maize production in the ten new countries is higher than internal needs. The net surplus would be by way of 2 million tonnes.
In the oil producing plant sector, Mercosur produces nearly half of world soya seed production accounting for 60% of vegetable oil. Production more than doubled between 1996 and 2003/2004 (40 to 92 million tonnes). Argentina ensures 14% of world sunflower seed production. The EU already depends on Mercosur for Soya imports: 77% of seeds and 93% of cakes, but also for sunflower (63% of imports). According to COPA, these imports must be taken into account in negotiations, as they are the proof that the EU is not a closed fortress to farm imports.
The sugar sector is, according to COPA, particularly sensitive at a time when European production is due to fall given the "Everything but Arms" initiative, future concessions at the WTO and the results of the panel launched by Brazil, Thailand and Australia against the EU.
Moreover, Brazil is the largest producer and exporter of sugar in the world with the lowest prices too. It accounts for 28% of international exports (as opposed to 4% in 1989/1990). Due to greater flexibility of the sugar/alcohol conversion in world prices, it possesses a gigantic potential alcohol capacity, representing seven time that of the Community's capacity (140 hectolitres per year). Underlining a passage that the sugar trade has not been liberalised in Mercosur, Copa considers that any concession on sugar would have disastrous consequences for the EU.
Ethanol creates a lot of fears just when the directive on bio-fuels should be encouraging the development of wheat-beetroot-alcohol subsidiaries in Europe. Copa highlights the fact that Brazil is the main alcohol fuel producer in the world but export relatively little due to lack of outlets. 5.75% of the European fuels market is expected to be assured by bio-fuels if the objectives of the Community directive are to be reached. A market of 140 million hectolitres in 2010 (as opposed to 4 million currently) which the European agricultural subsidiary wants to keep hold of.
The beef meat market is also under threat and is still fragile after the crisis of consumer confidence linked to BSE and foot and mouth disease but this is also due to reforms based on supply, traceability and rural landscape changes (herbaceous zones). Mercosur currently accounts for 6% of internal EU consumption but tariff concessions or enlargement of quotas could be translated into additional imports thanks to competitiveness in production f large areas and the devaluation of local currencies. Brazilian exports have grown from 553,000 in 2000 to 1,207,000 in 2003, Copa points out.
Pork meat sector: this is not a strong Mercosur point and imports of pork meat only represent 0.4% of European production. Nevertheless, the market, according to Copa, is fragile, and Brazil has production costs that are 30% less than those of the EU. The only significant producer in the region, Brazil, is already rivalling the Europeans on the Russian market.
Poultry production grew on average by 9.4% in Brazil, which accounts for two thirds of South American production. Copa notes that "according to some assessments, production costs for Brazilian poultry 'from the slaughterhouse' were 45% less than those in Europe", thanks, notably, to a cheap supply of corn and soya and climatic and social conditions. Brazilian exports have increased by 35% on average over the last ten years, form 384,000 tonnes in 1992 to 1.7 million tonnes in 2002. Copa thinks that the European market is largely open, given that imports already represent 10% of consumption and that all additional concession to Mercosur "will have serious consequences on the European subsidiary".