Paris’ obsession in opposition to a cope with Mercosur: shortcomings of French agribusiness
French agribusiness has struggled to take care of competitiveness, not solely in opposition to producers exterior the EU but additionally throughout the bloc, notably Poland and Romania.
Why is France so dedicated to keep away from making viable the European Union/Mercosur commerce and cooperation settlement? Curiosity group in France argue that home agribusiness has been present process profound structural adjustments over the previous few many years, amongst which declining productiveness, rising prices, and a waning curiosity amongst youthful generations in pursuing agricultural work.
A report from Brazil’s principal monetary journal, Valor, factors out that distinguished executives like Olivier Leducq, CEO of Tereos—one in every of France’s largest cooperatives—, and Alexandre Bompard, international CEO of Carrefour, have voiced express considerations over Mercosur meat manufacturing and imports for the EU.
French agribusiness has struggled to take care of competitiveness, not solely in opposition to producers exterior the EU but additionally throughout the bloc, notably in comparison with Poland and Romania.
Excluding drinks similar to wine and champagne, France’s agri-food commerce stability has been in deficit since 2014. The French Nationwide Institute of Statistics and Financial Research (INSEE) stories that the meat sector, particularly, has posted a damaging commerce stability since 2000.
These deficits spotlight an growing reliance on imports throughout the EU frequent market. Since 2015, with France as soon as all highly effective in Europe, has skilled a damaging agricultural commerce stability with different EU international locations, even whereas sustaining a surplus with nations exterior the bloc.
“The international locations gaining floor in Europe are the newly built-in Japanese European nations with decrease prices,” says Marcos Jank, coordinator of the Insper Agro World Heart. For instance, within the corn commerce, the place France stays a internet exporter, imports from Poland rose 22-fold between 2018 and 2022, whereas imports from Romania soared 63%.
Consultants attribute this lack of competitiveness to France’s low-scale, regional agricultural mannequin, which is topic to stringent rules. On this context, the agricultural sector struggles to draw younger expertise. From 2010 to 2020, the variety of relations working full-time on farms fell by 38%, in line with INSEE.
As household succession diminishes, many farmers decide to promote their land to different producers, contributing to a slight improve in land focus over the previous decade. The common farm dimension in France grew from 55 hectares in 2010 to 69 hectares in 2020.
Nonetheless, this scale pales in comparison with farms in South America. In Brazil, the 2017 Agricultural Census recorded a median farm dimension of 69 hectares, however the actuality is starkly polarized: 2,450 farms exceeding 10,000 hectares account for 15% of the nation’s agricultural space, whereas over 600,000 properties smaller than 1 hectare collectively make up simply 0.1% of Brazil’s rural land.
“In France, farms are predominantly small. You possibly can’t be aggressive with out economies of scale,” says Mr. Jank. “One other issue is that in Brazil, we will obtain two to 3 harvests a 12 months, whereas in France, there is just one.”
A French agribusiness govt highlighted Brazil’s potential to “dilute fastened prices,” bolsters its competitiveness. Whereas cooperatives in France may alleviate value pressures by sharing assets similar to equipment, the mannequin faces challenges. “The cooperatives there are sometimes working deficits,” the manager famous. Stricter EU rules on pesticides and veterinary merchandise are additionally incessantly cited as components driving up manufacturing prices for French farmers.
The EU has already banned a number of substances nonetheless in use in Mercosur international locations for environmental and well being considerations. These embody the insecticide chlorpyrifos, the herbicide glufosinate ammonium, and the antibiotics monensin and flavomycin, which improve livestock efficiency.
Nonetheless, some French organizations inaccurately cite merchandise banned in Brazil as nonetheless being in use. As an example, the Institute d’Elevage (IDELE), which focuses on livestock, claimed in a November report that Brazil continues to make use of bacitracin and virginiamycin as development promoters, although each had been prohibited in 2018. Equally, a 2022 INSEE report talked about carbendazim and fipronil pesticides, although carbendazim was banned, and the first use of fipronil was restricted that very same 12 months.
Regardless of the continued use of sure merchandise in Mercosur which might be prohibited within the EU, consultants this isn’t the first driver of productiveness variations. Europe, in contrast to tropical areas, doesn’t take care of the identical number of pests.
In livestock farming, value disparities are magnified by differing practices. Whereas cattle in South America are sometimes pasture-raised, French cattle are sometimes confined, requiring fixed feed supplementation. “The price of constantly offering feed is basically totally different,” observes one other supply.
Knowledge from worldwide consultancy Agribenchmark highlights the stark distinction in manufacturing prices. Between 2018 and 2020, beef manufacturing prices in Mercosur had been 40% decrease than in Europe; in Brazil alone, the distinction reached 60%. Inside Europe, France’s fattening prices are notably increased than these of different international locations, similar to Germany.
In keeping with INSEE, one key issue enhancing the competitiveness of Brazil’s meat sector is the dominance of three main exporters—JBS, Minerva, and Marfrig—which permits them to “obtain vital economies of scale.” Moreover, the devaluation of Mercosur currencies “makes South American meat cheaper when it reaches France.”
Unsurprisingly, the French livestock sector has undergone vital restructuring and stays among the many staunchest opponents of the EU-Mercosur settlement. Between 2010 and 2020, the variety of French farms devoted to livestock declined by 3.6%, representing two-thirds of the entire discount in farms nationwide. The impression on land use was mitigated solely by consolidating farms into extra intensive operations.
Regardless of its strengths, Brazil faces challenges in totally using the Hilton quota—a preferential tariff allocation for premium beef cuts exported to the EU. For the present cycle working from July 1, 2024, to June 1, 2025, Brazil allotted 8,900 tons however had stuffed solely 14% of this quantity by November 1. “The difficulties [of exporting to Europe] are so nice that exporters want to ship to Asia,” says Mr. Jank.
The EU-Mercosur settlement presents a decreased tariff quota for 100,000 tons of beef throughout the complete EU bloc. Nonetheless, this doesn’t eradicate tariffs; as an alternative, it incrementally raises quotas, making a ceiling for Mercosur exports. “In the end, this can be a whole lot for the French,” says Ambassador José Alfredo Graça Lima, from Brazil. He argues that Mercosur international locations are failing to capitalize on alternatives in a rising European market.
The ambassador, who has served on the World Commerce Group (WTO) and was concerned within the early phases of EU-Mercosur negotiations, means that French resistance goes past present financial challenges. “From the very first second, in 1999, France has by no means been in favor. The European sector has all the time aligned with the Widespread Agricultural Coverage, which is protectionist by design, aiming to take care of costs at sure ranges.”
