wines, spirits, dairy products… Which agricultural sectors could benefit from the free trade agreement in France?

“Mercosur is no!” After actions across France a week ago, farmers are mobilizing again, from Tuesday November 26, against the signing of a free trade treaty between the European Union and five South American countries ( Argentina, Brazil, Uruguay, Paraguay and Bolivia). The four main French unions are moving in the same direction. The National Federation of Farmers' Unions (FNSEA), the Young Farmers, the Peasant Confederation and the Rural Coordination denounce a risk of “unfair competition” which threatens the sector.

This trade agreement does not only concern the agricultural world. It also covers industry (automobiles, chemicals, textiles, pharmaceuticals). But in these talks, “European agriculture serves as a bargaining chip to open industrial and service markets in South America”estimated Maxime Combes, economist at Aitec. Furthermore, “Mercosur agricultural sectors are much more competitive than those of the EU in absolute terms and are therefore a clear winner”notes the specialist, who campaigns against the project within a collective. Brazil and Argentina are indeed major exporting powers, particularly of meat, soya, corn and cane sugar. However, a few rare agricultural and agri-food sectors could emerge as winners from the negotiations.

If France has a key export sector, it is that of wines and spirits. With this new free trade agreement, which could eliminate the current customs duties of 27% with South America, some winegrowers are already toasting. “If taxes are removed, we could multiply our exports by 1.5”welcomes on France 3 Occitanie Jacques Tranier, director of Vinovalie, a wine cooperative in the South-West.

Same enthusiasm in Côte-d’Or. “The agreement between the EU and Mercosur would enormously simplify the customs complexity that exists with Brazil,” recognizes on France 3 Bourgogne Franche-Comté Cyril Meuley, responsible for exports to Latin America for the trader Boisset, in Nuits-Saint-Georges. It is, according to him,“u“immediate business opportunity”. It comes at the right time, so “concern is growing regarding the arrival of Trump taxes”adds Jean-Marc Lafont, president of Inter Beaujolais, in The Tribune. The American president-elect threatens to relaunch all-out trade wars, in particular via a dizzying increase in customs duties.

Along the same lines, cognac producers seem very favorable to an agreement between the EU and South America. “It is important to be able to access new markets,” explains Tatiana Mais, general delegate of the Maisons de Cognac union. Free trade agreements like the one with Mercosur “are essential for our sector and we are therefore in favor of it”she assures.

“In Europe, the wine industry is very industrialized and very competitive.deciphers the economist Maxime Combes. However, “when we say that a sector wins, it is not necessarily the small local winegrower who will winhe warns. CRather, it is the big groups and the intermediaries who really win.” The latter often prefer to remain silent, as the subject is sensitive in the agricultural world.

Questioned on this subject, the Champagne Committee, which represents the interests of this largely exporting sector and partly owned by large groups such as LVMH, “does not wish to comment”. The response is similar at Pernod Ricard. Only a video published on YouTube by the Business Europe organization in July 2023 gives a glimpse of their position. The free trade agreement with “Mercosur will make it possible to eliminate many customs duties”welcomed a manager of the spirits giant.

French winegrowers also risk facing increased international competition on the French market. In the event of an agreement, the Mercosur countries will also be able to benefit from these export facilities. Although far behind France, Italy and Spain, Argentina is still among the ten largest wine producers in the world, according to the International Organization of Vine and Wine. (PDF).

The dairy products sector represents the other French flagship which could well rub its hands. If signed, tens of thousands of tonnes of cheese, powdered milk and infant formula could thus be exported without customs duties. An opportunity for France, which in 2018 was the leading exporter of dairy products from the EU to Mercosur, according to the European Commission. Butter and yogurt should also see their taxes drop. Good news for French giants established there, such as Lactalis, number 1 in the sector in Brazil since 2019, thanks to the acquisition of a local company.

But even more than for wine, small milk producers may not see the color of this new windfall. “The interest for Lactalis will above all be to be able to obtain supplies on international markets more easily”explains Maxime Combes. “The small milk producer is not the one who is going to export. He aspires to be collected.” However, Lactalis recently announced a reduction in its volumes purchased in France. In this context, the National Federation of Milk Producers, close to the FNSEA, requested, in October, “the total cessation of negotiations” with Mercosur. And this despite the promised protection of many geographical indications, such as the county.

“The logic of this agreement is to favor the most competitive, that is to say highly industrialized agribusiness. says Maxime Combes. French agri-food giants could thus establish themselves in new markets and increase their turnover, without this always being favorable to French farmers, who are worried about incomes that are still too low. “You have to be very big, very competitive or very recognized to really be able to stand out in the game, warns the economist. This also risks eliminating the least competitive.”