Hogan: Balanced trade deals beneficial for EU farming

Copa President Martin Merrild: “I understand the frustration of EU farmers when they ask what the benefit of trade is for us." [Daniel Cukier/Flickr]

Trade deals have boosted EU agricultural exports as well as employment in agri-food and other economic sectors, a new European Commission study has found.

Hit hard by the Russian embargo and sluggish Chinese demand, over the course of the last two years, European agriculture has found itself in a difficult and often complex situation.

The European Commission is making efforts to reach out to new markets for EU agricultural products and Agriculture Commissioner Phil Hogan has already led several trade missions to countries outside Europe (Colombia and Mexico, China and Japan, Vietnam and Indonesia) to boost EU exports.

New CAP is still struggling to find new export markets

Agriculture Commissioner Phil Hogan has launched a “diplomatic campaign” to find new markets for EU products. But external trade complexity and an unbalanced internal market pose serious challenges for the executive.

According to the executive, Hogan’s next visit will be Canada in May. EU Trade Commissioner Malmström will also visit Canada in March, as well as Singapore and Mexico later this year.

Domestic production “not affected”

A study conducted by Copenhagen Economics on behalf of the Commission examined the trade agreements with Mexico, South Korea, and Switzerland.

It found that these deals increased EU exports by more than €1 billion, boosted imports of products from these three countries, giving EU consumers and business greater access to agri-food products and raised the value of the agri-food sector by €600 million.

Hogan stressed that this increase in exports had supported thousands of jobs in total across the EU, most of which in the agri-food sector, including in primary agriculture.

“These figures are clear evidence that ambitious and balanced trade deals work for European food and farming,” he pointed out.

In addition, the study suggests that increased imports did not have a major impact on production within the EU, and mainly reflect the replacement of imports from other third countries or an increase in EU consumption.

Record year for EU agri-food exports

In 2016, the three trade deals with Mexico, South Korea, and Switzerland contributed to a record year for EU agri-food exports, reaching €130.7 billion, up €1.7 billion from 2015.

Japan overtakes Russia in EU agri-food exports

Japan has overtaken Russia as the fourth most important export destination of EU agri-food products after the United States, China, and Switzerland, a new European Commission report has found (23 December).

“The biggest increases in annual exports were to the USA (up €1.26 billion) and China (up €1.06 billion). At the same time, the value of EU agri-food imports went down 1.5% to €112 billion,” the study says.

The study continues: “The agri-food sector made up 7.5% of total EU exports in goods in 2016. 6.6% of all imported goods are agri-food products. With a surplus of €18.8 billion, the agri-food sector contributes almost half of the overall surplus of the European Union in merchandise trade, which stood at €39.3 billion in 2016.”

EU farmer reaction

Commenting on the report, Copa-Cogeca Secretary-General Pekka Pesonen stressed that farmers should also increase the share of their earnings.

“Farmers and their cooperatives are committed to finding new sources of growth, like in new export markets, but farmers must also reap the benefits of this in terms of increasing their market-based revenue. Efforts must be stepped up,” he noted.

In an interview with euractiv.com last week (24 February), Pesonen underlined that once we get into new markets we have to ensure that some of those gains also come back to farmers.

Copa-Cogeca: New export markets did not increase EU farmers’ income

The EU found new niche markets to balance the losses of the Russian embargo but this has not translated into increased income for farmers, Pekka Pesonen told EURACTIV.com.

He stressed that despite the Russian embargo, no major decline in exports has been noted but the big question mark for farmers is why recent developments have not delivered results all the way to farm level.

“We have to trade, we have to export and to continue exporting but those larger export markets came at a price. In order to open these markets, we had to cut prices, and the pinch has of course been felt most acutely by farmers. That is why agricultural income fell in 2016 compared to 2015, which was already a difficult year,” he explained.

In the same line, Copa President Martin Merrild stated, “I understand the frustration of EU farmers when they ask what the benefit of trade is for us.”

Referring to the findings, he commented that they confirmed that the EU agri-food sector is competitive on international markets and we should be proud of the investment made at farm level to respond to market demand.

“The EU has been keen to use the full potential of these trade agreements. And we encourage the European Commission to make the same effort when it comes to maximising the potential of implementing the trade agreement between the EU and Canada (CETA). We support the agri-business trade mission of Commissioner Hogan to Canada,” he said.

EU Commissioner for Trade Cecilia Malmström said, “Trade deals, done right, are a force for good for our farmers and food producers. This study also gives important input on how we can continue to cut unnecessary red tape and get rid of barriers in our trade negotiations going forward”.

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