Insight Focus
The Mercosur–EU deal opens opportunities for Brazilian agribusiness. Signed in January, the agreement promises expanded export access despite ongoing uncertainty over its implementation timeline. Brazil is already preparing to boost shipments of products such as coffee and fruit, which currently face tariffs of up to 14%.
Recent questions surrounding the implementation of the free trade deal between Mercosur and the EU have not dampened the spirits of Brazilian farmers and exporters. Signed on January 17, after 25 years of negotiation, the agreement will allow for the gradual removal of tariffs on a range of food products, as well as manufactured goods.
The remaining question is when the treaty will come into effect. The European Parliament recently voted in favour of a legal review of the text. While the European Community is pushing for a quick solution, Mercosur is preparing for the new range of export opportunities that should arise from the agreement.
Although some agricultural and livestock goods have tariff reductions restricted to annual quotas, the treaty is viewed optimistically by the agribusiness sector. Without these concessions, the deal would hardly have come to fruition, according to Brazilian diplomats familiar with the matter.
In the case of sugar, up to 180,000 tonnes/year can be exported tariff-free, which corresponds to less than 10% of the EU’s imports. Regarding beef, the permitted quota is equivalent to less than 2% of total consumption in the European bloc, according to the Brazil-France Chamber of Commerce.
Cattle in France
Competitiveness Challenges for European Agriculture
Issues concerning the competitiveness of European agriculture, generally dependent on subsidies, are at the centre of the debate. While Mercosur countries (Argentina, Brazil, Paraguay, and Uruguay) have been increasing crop yields, the reality in most European countries is somewhat different.
Corn, which is subject to export quotas to the EU under the agreement, is a good example. The crop’s yield has remained stable in Europe after years of constant investment, while in Brazil it has been making significant progress. The development of cultivars adapted to the tropical climate, the increasing use of technology, and good agricultural practices account for these positive results.
In livestock farming, the scenario is similar. Meat production has been following a downward trend in the EU, pressured by higher costs, environmental concerns, and tighter margins.
Source: USDA
This means increased imports of meat at more competitive prices from Mercosur could represent an additional challenge for European producers.
Opportunities for Brazil
For Brazil, on the other hand, the trade agreement with the EU represents an opportunity to diversify exports, reducing dependence on China. Today, almost half of agricultural shipments go to Chinese ports. The EU, in turn, accounts for about 15% of Brazilian agribusiness exports, with room for further growth.
Source: Comex
Some products, such as coffee and fruit, represent some of the greatest opportunities for increasing exports to the EU.
Currently, sales of roasted, ground and soluble coffee to the economic bloc are subject to tariffs ranging from 7.5% to 9%. Under the treaty, there will be a gradual tariff reduction until it reaches zero within four years.
The EU represents the fourth-largest destination for exports of soluble coffee, which has higher added value.
“When import tariffs in Europe came into effect more than 15 years ago, there was a 30% reduction in sales to the continent,” says Aguinaldo José de Lima, director of the Brazilian Soluble Coffee Industry. “With the removal of taxes, exports should increase, although this should take a few years due to disputes over the trade deal in the EU.”
Source: Comex
Brazilian producers are also concerned about the advance of international competition, especially from Vietnam, one of the world’s largest coffee producers.
Since the entry into force of the free trade deal between Hanoi and the EU in 2020, Vietnamese coffee exports to the European bloc have skyrocketed. Shipments grew approximately sevenfold between mid-2020 and March 2025, according to the Vietnamese government.
The hope is that Brazil will reach an equal position with Vietnam in exports to the EU through the implementation of the free trade deal.
Boost in Fruit Exports
In the case of fruits, which are subject to tariffs of up to 14% in the EU—as is the case with grapes and lemons—the gains should also be significant. The European bloc already occupies a central position in Brazilian fruit imports.
The Netherlands, a distribution hub in Europe, is usually the main destination for fruits exported by Brazil. By 2025, shipments to the country are expected to account for 41.6% of the revenue generated, with melon, watermelon, mango, lemon and grapes being the most prominent, according to Comex.
Source: Comex
However, there are some challenges to overcome. Even with large producers—especially in the São Francisco River Valley in Bahia—fruit farming still has a limited share in Brazil’s agribusiness export agenda, which is led by the flagship sectors of agriculture and livestock farming. Historically, fruit production has been primarily geared toward domestic consumption.
Source: Comex
The reduction in export tariffs to the EU tends to make the prices of Brazilian products more competitive in the European market, which should boost the sector’s export chain.
However, the market faces some bottlenecks. One of the main ones concerns logistics. Large-scale fruit production in Brazil is generally concentrated far from the main ports, which increases transportation costs.
Furthermore, supply is often irregular, dependent on climate and limited by the availability of technology. Irrigation, for example, is still not accessible to many producers.
Brazil and other Mercosur countries also face competition from established players in the European market, such as Peru and Chile, which are already suppliers of fruits like avocado, blueberry, mango, citrus, grapes and apples.
Another sector set to benefit from the free trade deal is poultry farming. Currently, exports to European countries reach approximately 99,000 tonnes per year.
Source: Comex
This figure may seem significant, but it is much smaller than the total shipped to the Middle East (1.4 million tonnes in 2025) and to countries such as Japan and China, which imported more than 450,000 tonnes of Brazilian poultry last year, according to Comex.
Of the total revenue generated from poultry exports in 2025, USD 8.8 billion, European countries accounted for less than 5%.
The export regime for poultry defined by the trade deal with the EU has been viewed favourably by Brazilian meatpacking plants. After all, the quota of 180,000 tonnes per year, exempt from taxes, is equivalent to almost double what Brazil currently exports to the EU.
It is true that the quotas defined in the agreement apply to all Mercosur countries combined. Brazil, however, has a clear competitive advantage: the country leads poultry exports in the region. Last year, more than 5 million tonnes were shipped from Brazilian ports, according to Comex.
Argentina, in turn, usually exports much more modest volumes, at less than 200,000 tonnes. This year, shipments are estimated at around 150,000 tonnes, according to the USDA.
In general, poultry farmers, as well as other segments of agribusiness, remain cautious only regarding one issue. No one dares to predict when the trade deal will actually come into effect. But one thing is certain: the treaty should open a range of opportunities that Brazilian agribusiness is ready to seize.
