Bakers prefer butter, helping prices soar
Consumers around the world are willing to pay more for products containing dairy and this is driving demand for butter and cream, says Fonterra.
The European Dairy Association (EDA) says the trade deal between the European Union and Mercosur (comprising Argentina, Brazil, Paraguay, and Uruguay) will boost EU dairy exports to the region. The deal comes after two decades of negotiations.
Anton, EDA Secretary General, says the agreement, involving over 780 million citizens, highlights the EU’s commitment to fostering robust international trade and mutual economic growth.
“In today’s troubled international environment and trade arena, this is a real breakthrough that underscores the EU’s trade ambitions and the remarkable performance of its negotiation teams,” says Anton.
He notes that from a dairy perspective, all four countries forming the Mercosur area have a great dairy culture, with a self-sufficiency rate between 98% and 281%.
So far, dairy trade has mainly taken place within the Mercosur region. The cheese and powder imports from the EU have not reached a significant volume, he adds.
“But this is where opportunities lie. The signing of this deal will allow both parties to work on the final implementation and secure unhindered access for our European dairy exports, including the reduction and abolishment of tariffs as well as nontariff barriers.
“The adopted legal safeguards to protect over 350 high-quality European food and drink products like Fromage de Herve (Belgique) or Comté (France), from imitation in Mercosur countries will also strengthen the well-deserved high-quality reputation of all European dairy products.”
It’s not a done deal yet. The deal needs ratification by the four South American nations and the EU.
The EU expects the ratification process is to proceed at two different speeds.
Mercosur countries are likely to ratify the trade agreement relatively quickly in the coming months. Currently, the deal excludes Venezuela (suspended since 2016) and Bolivia, which joined Mercosur only in July 2024. Bolivia has four years to comply with all Mercosur treaties and regulations before it can ratify the EU-Mercosur free trade agreement.
In contrast, the ratification process for the EU will be lengthy and might stall. The agreement requires a legal review before its ratification by the Council of the European Union and a majority in the European Parliament. Thereafter it requires the ratification of every EU member state, though the trade chapter could be accepted by a qualified majority if the EU decides to separate the trade elements.
The landmark deal is the largest ever concluded by the EU and the only one Mercosur has with a major trading bloc—which means that European products will enter its market under much better conditions than US or Japanese products.
It eliminates tariffs on over 90% of bilateral trade, saving European exporters €4 billion annually while granting South American products preferential access to European markets, particularly for agricultural goods where Mercosur holds a strong comparative advantage.
The agreement is set to change this dynamic, opening Mercosur’s highly protected market to European industrial goods. For instance, previous tariffs on automobiles, textiles, and machinery ranged from 14% to 35%. The agreement also ensures the protection of 357 European geographical indicators, boosting exports of specialty agricultural products like wines and cheeses.
