EUROPEAN COMMODITY markets are likely to come under increased pressure later this year as Brussels forges ahead with a bilateral trade deal with the Mercosur countries of Argentina, Brazil, Paraguay and Uruguay.

The latest offer from the EU would see a significant rise in the volume of low tariff meat, grain and dairy produce coming into the EU from South America.

For example, the offer would allow the bloc to ship an extra 100,000t of top quality “Hilton” beef to the EU on preferential terms – 50,000t up front, with the balance dependent on the outcome of the Doha Round of world trade talks.

That would more than double the 40,300t of chilled boneless cuts that currently come in at just 20% duty.

A similar two-phase approach is to be applied in respect of 700,000t of maize, 200,000t of feed wheat, 11,000t of pigmeat, 75,000t of poultry, 33,000t of dairy produce and 1bn litres of bioethanol.

In return, the EU is seeking better access to the South American market for industrial goods and services, investment opportunities and processed foods.

In particular, it wants improved access for wines and spirits and better protection for EU foods with designated origin status, such as Parma ham.

The developments have angered EU farmers‘ organisation COPA, which has accused the commission of using agriculture as a “bargaining chip” in order to get access to other South American markets.

COPA is concerned that extra volumes of low cost beef will destabilise a market which is still fragile post-BSE, and which will soon have to cope with extra supplies once over 30-month cattle are re-admitted in the UK.