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On 28/06/2019, after twenty years of negotiations, the European Union reached a bilateral trade agreement with Mercosur. The agreement will affect 773 million people, thanks to which the European Union will save over EUR 4 billion per year on customs duties. The agreement also covers food safety and environmental rules, and includes commitments on labour rights and environmental protection (including the Paris Climate Agreement). Agriculture and Rural Development Commissioner Phil Hogan said there was a need for compromises in the negotiations, but sensitive EU commodities should be protected. In the event of market disruption caused by opening the border for the Mercosur goods, a EUR 1 billion will be allocated to support EU farmers' incomes.

The European Union has granted tariff quotas for beef, poultry, ethanol, rice, eggs and egg products, garlic, and pork, while improving the already existing sugar quota. All this on condition that Mercosur offers a satisfactory offer for European dairy products, wine, spirits and high-quality products with a protected geographical indication. Over time, the agreement should guarantee the abolition of customs duties on 91% of EU exports to Mercosur and the elimination of 92% of customs for Mercosur.

The EU offered a quota of 99,000 tonnes of beef with a 55/45 split between fresh/frozen products at a custom rate of 7.5%; furthermore, 650,000 tonnes for ethanol, of which 450,000 tonnes for the chemical industry alone. It is also provided: 180,000 tonnes for sugar without customs duties, 180,000 tonnes for poultry sector with 50/50 split between bone-free meat/with a bone, 3,000 tonnes for egg albumin and 3,000 tonnes for egg yolks, and 25,000 tonnes for ractopamine-free pork (protein synthesis stimulant) with a customs duty of 83 EUR/t. Rice was listed as a custom-free raw material with a quota of 60,000 tonnes, and 45,000 tonnes was allocated for honey. Mercosur has granted 30,000 tonnes of European cheese quota and will reduce customs duties on butter, wine & spirits, chocolate and biscuits. Over the years, the fees for olive oil, apples, pears and frozen potatoes will be abolished.

Copa and Cogeca, Europe's largest agricultural organization, said the agreement with Mercosur will bring double standards on the EU market and unfair competition for some key European products, disagreeing with the quota for beef and poultry meat. Ireland also disagrees with the agreement and plans to vote against the approval of the trade agreement because it threatens Irish beef production. Environmental organizations have highlighted the potential risk of extending deforestation of the Amazon forest due to increased agricultural production. Sugar producers also have objections due to the increase in existing quotas.

Both sides will review the approved text in the coming weeks. In the European Union, the agreement will be translated into all European languages and submitted to the European Parliament and the Council for approval.

European Commission press release available here.

The Polish government has responded to the May decision of the EU Court of Justice that previously introduced progressive taxes on retail chains in Poland were not contrary to the EU law, as the European Commission thought, by immediate reintroduction of retail chain taxes. Poland introduced progressive taxes in 2016, but in 2017 the Commission stopped tax enforcement for non-compliance with the EU law. Poland exempted from the tax companies with a turnover of less than EUR 4 million, companies with a turnover of between EUR 4 million and EUR 40 million had to pay a tax of 0.8%, and for companies with a turnover of over EUR 40 million Poland introduced a tax rate of 1.4%. The Commission has identified the tax as discriminatory, but according to the EU Court of Justice the introduction of a tax is in line with EU law. Poland has therefore stated that it will introduce a progressive tax on retail chains again, and that it should apply from September 2019.
More information is available here.

The Polish government has put forward a proposal for national legislation aimed at protecting farmers from unfair commercial practices in the retail chain. Legislation should prevent producers from buying agricultural commodities at extremely low prices, so food producers will be obliged to conclude written contracts with farmers. The proposal also allows the Ministry of Agriculture to determine the minimum period for which contracts should be in force, while setting minimum prices for certain agricultural commodities.
More information is available here.

European food producers headed by Nestlé have supported the introduction of a Europe-wide harmonized nutrition labelling system for food packaging with Nutriscore (colour scheme labelling that should allow consumers to better orient themselves in food purchases and prefer healthier foods). According to Nestlé CEO, Nutriscore has already received support in France, Belgium and Switzerland, other countries have shown interest in implementing the system, and the Commission should therefore consider introducing Nutriscore as a Europe-wide labelling scheme. Nestlé has committed itself to the implementation of Nutriscore in the past week. The European Commission should publish in mid-July a report summarizing best practice on nutrition labelling. While food producers do not expect any major proposals to change the system, they believe that the report should reopen the debate on the introduction of a Europe-wide unified system.

African swine fever infection in China continues to spread, according to some sources the number of pigs in farms has been reduced by up to half, either by discharging the disease outbreak or by the consequences of the disease itself. As a result of this dramatic decline in the number of pigs in farms, pork prices have raised, which could increase by up to 70% in the coming weeks, and the living standard of a large proportion of the total of 40 million pork producers to decline.
More information is available here.