Confirmed: Mercosur Study Spells Trouble For Scottish Farmers

28 November 2011
Alyn Smith MEP, Scottish full member of the European Parliament's Agriculture and Rural Development Committee, has reacted with concern to an independent impact assessment examining the implications of a trade deal for farmers between the European Union and Mercosur.

The study examined a series of scenarios based on the respective EU and Mercosur "offers", as well as the cumulative impact of a final agreement of the world trade talks under the Doha round. It confirms what many suspected: "significant losses to EU producers and gains to Mercosur producers in all scenarios". In total, EU agricultural producers could lose as much as 7.75 billion EUR, or a 3.21% drop in revenue, with the beef sector taking the brunt, with an increase in as much as 524,000 tonnes of beef imports from South America. More worryingly, the study also notes that "it is clear that on a per capita basis the losses to EU agricultural producers far outweigh the gains to those accruing in EU manufacturing or to EU food consumers."

Scotland, and Scottish beef in particular, is expected to be disproportionately hit by the trade deal. The different scenarios propose a range of possibilities for the fall in beef production, from 2.17% to 6.81%, with beef revenue down by a range of values from 7.61% to 18% in the worst case. Agricultural revenue as a whole could fall by 7.1% if there is a Mercosur and Doha deal - which would make Scotland the 7th worst hit in the EU.

Alyn said:

"While these figures are, of course, best estimates, this study is a serious piece of work and the numbers are pretty stark.

"It is concerning to receive concrete evidence of what we have always suspected - that a trade deal with Mercosur, while leading to a very small increase in overall EU GDP, would have a disproportionate negative effect on our agriculture, and that Scotland, with our significant livestock sector, would be one of the hardest hit by the deal. I'm philosophically in favour of free trade, but the realities of any agreement cannot simply sacrifice entire sectors to competition from farmers producing to much lower standards than we demand from our farmers, in animal welfare, disease control and wage costs.

"Scottish beef farmers have been through tough times with volatile markets, rising input costs and the fallout from BSE and foot-and-mouth, so we have to be extremely careful in how we negotiate in order to maintain basic protections. I find it particularly interesting that this impact assessment acknowledges that, per capita, agricultural producers will be far more negatively hit than any other sector will gain, so I don't see why we should be rushing towards an agreement unless it is clearly in our interests.  

"This information also makes it critical to re-examine the proposed change to the European Globalisation Fund to include farmers. The Commission has made it clear that it expects the proposal to act as a pay-off to producers leaving the sector as a result of a Mercosur trade deal. We must make it clear to them that European agriculture cannot be sacrificed so easily."

Impact Assessment: http://ec.europa.eu/agriculture/analysis/tradepol/trade/mercosur-fta-impact-1_en.pdf

Annexes (with Scottish figures): http://ec.europa.eu/agriculture/analysis/tradepol/trade/mercosur-fta-impact-2_en.pdf