After a quarter of a century of negotiations, the free trade agreement between the European Union and the South American Mercosur countries was signed in December.
However, not everyone is celebrating. Luxembourg’s farming and wine-growing sectors, in particular, have voiced significant concerns.
The EU aims to bolster its economic standing through the agreement by eliminating customs duties, expanding export opportunities, and tapping into a market of over 260 million consumers. In theory, these measures should stimulate trade significantly.
Yet, as André Mehlen, Managing Director of Domaines Vinsmoselle, explained, the path forward is not without its challenges.
Mehlen pointed out that exporting products like crémant to South America is easier said than done. “Building a market requires brand awareness, which necessitates substantial investment,” he noted. He also highlighted the stiff competition from established producers in countries like Chile, Argentina, and Brazil. Despite the hurdles, Mehlen assured that Domaines Vinsmoselle would explore these new markets if conditions prove favourable.
However, it is the beef sector that faces the most profound impact. In 2024, beef production in Luxembourg fell, pushing many farmers into financial distress. Christian Wester, President of the Luxembourg Farmers’ Association, expressed deep reservations about the agreement. He criticised the prospect of European farmers having to compete with “global players” from South America, noting significant disparities in regulatory standards.
Wester emphasised the differences in environmental, social, and animal welfare regulations between Europe and South America. “We are subject to increasingly stringent rules, while simultaneously opening our doors to beef from third countries. This situation is alarming for us,” he lamented.
Imports from South American countries are often cheaper, placing European farmers at a competitive disadvantage due to their higher production costs. Stricter regulations on climate protection and animal welfare further increase these costs, making it increasingly difficult for Luxembourg farmers to compete in the global market. This price disparity is frustrating for local farmers who feel they are being left behind.
Wester drew an apt analogy comparing the situation to a game of chess. “If we were playing chess, we would be the pawns that are sacrificed so that all the rest could continue to function,” he remarked. Despite this, Wester emphasised the strategic importance of farming, stating, “We need farmers. It’s a strategically vital sector.”
Wester pointed to the pandemic as a stark reminder of the risks associated with relocating major production outside Europe. “When it comes to food production, Europe currently has the capacity to produce a substantial amount independently. It would be regrettable if economic interests led us to sacrifice this self-sufficiency, leaving us dependent on food imports to feed our population one day,” he warned.
The Luxembourg Farmers’ Association is now seeking to bring its concerns to political leaders. They hope to present their demands and find solutions that will help sustain European agriculture.
