Amid the consternation on tariffs there is a certainty; it is time to get Mercosur done. The EU trade agreement with Argentina, Brazil, Paraguay and Uruguay concluded last year and follows one with Canada. A deal with India is well advanced, and Indonesia is in the offing. Mercosur is ready now, but it is politically tricky here. It is a big win for Ireland, but beef farmers feel challenged, the Opposition supports them, and there is no sign of the Government taking its courage into its hands. That is not sustainable politically in Brussels, nor is it in Ireland’s interest as a trading nation.
Mercosur is a distinct issue, but interconnected with other issues that affect farmers, including threatened Common Agricultural Policy (CAP) spending in the seven-year €1.8 trillion EU budget from 2028, announced on Wednesday. Then there is the Nitrates Directive under which Ireland has a derogation allowing greater livestock density, and which runs out this year. The derogation is connected to our underperformance under the Habitats Directive. Green policies are important after all.
The farming vote is not what it was, and farm politics is fractious. But farmers are disproportionately important to the Government parties which have thin electoral margins. Minister for Agriculture Martin Heydon must simultaneously move out of the cul de sac that is opposition to Mercosur, deliver on the Nitrates Directive derogation this year and build a coalition for EU budget negotiations next year. Writing a commitment into the Programme for Government to oppose the current Mercosur trade deal was a particular error of judgment.
A 10 per cent tariff with the US is now a new baseline – and much worse is possible. The Mercosur deal eliminates tariffs on 91 per cent of all products, benefiting virtually all Irish goods. In 2023, that included €329 million in chemicals and pharmaceuticals. The value of Irish services exported to Mercosur is €1.8 billion per year. Farmers win because tariffs will be reduced from 55 per cent to zero. The political rub, however, is that the deal allows 99,000 tonnes of Mercosur beef to enter the EU market with a 7.5 per cent duty. That is about one steak per person per year.
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But it is the narrative that has jammed political support for the deal which requires that imported food products comply with EU Sanitary and Phytosanitary standards. Curiously, we happily import protein from the Mercosur countries to feed our livestock here. This is a matter of interest, not principle.
It is fair to insist that what is agreed is policed properly. But expat policing isn’t a new concept in a country where we welcomed Russian vets to verify animal health standards during the BSE crisis of the 1990s.
Mercosur is one of several trade deals that can partly rebalance the cost of US tariffs. It is also imperative that it is not a diversion as we try to hold on to the Nitrates Directive derogation. Emerging plans to divide the country into 48 administrative regions to assess compliance with environmental standards seem bizarre. An extended derogation, which we are the very last to benefit from, should be based on future full compliance of the entire country with the Habitat Directive.
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Farm product prices are at record highs, except for cereals. These are good times for farmers generally, but they are also changing times. The EU budget proposed this week is just the beginning of a long process.
Ireland will hold the presidency of the EU Council in the second half of 2026. That is both an opportunity and a restraint, but it will double down on domestic political pressure to shape an EU budget that is more supportive of farmers. The current proposal means the CAP is no longer a standalone fund and is instead merged with EU cohesion, migration, and infrastructure funding. What isn’t ring-fenced is not guaranteed. Ultimately, this is the real fight for farmers and will matter long after Mercosur is a fact, and a Nitrates Directive derogation that may be extended temporarily is a distant memory.
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Farmers are divided between beef and dairy, and between big and small. Farm politics is a melee. Dairy farmers, even with a derogation from the Nitrates Directive, need more land, which is pushing up prices. That edges out younger farmers but suits older ones who are happy to take higher rents. The EU now has other priorities, including defence, to compete with the CAP established in 1962. Big decisions will be taken this year and bigger ones in the next 18 months. Holding out against Mercosur is a tactical mistake for farmers in terms of their own interests. More importantly, it is a strategic mistake by the Government in terms of the national interest.
