The EU-Mercosur trade agreement promises to create one of the largest free trade zones in the world, uniting nearly 800mn consumers across Europe and South America. But, as Slovenia’s Chamber of Agriculture and Forestry (KGZS) warns, while European farmers are bound by ever tighter rules on animal welfare and chemical use, vast agribusiness operations in South America continue to rely on practices long banned in the EU. 

From the use of growth hormones and antibiotics in livestock to intensive confinement systems and deforestation-linked agriculture, the chamber argues in comments emailed to bne IntelliNews that the agreement risks importing not just cheaper beef and poultry, but production practices the EU has spent decades trying to eliminate.

The EU-Mercosur trade agreement entered a new phase of uncertainty after the European Parliament voted on January 21 to refer it to the EU’s top court for a legal review, effectively suspending the approval process and potentially delaying ratification by up to two years.

The agreement has become one of the most controversial trade initiatives in recent years, triggering widespread debate across Europe about its implications for food safety, environmental protection, animal welfare, and the balance between free trade and the preservation of high production standards. Concerns are particularly acute in Slovenia, whose farms are far smaller than the EU average, and where sustainable agriculture has long been a priority. 

Unfair competition 

KGZS has voiced strong opposition to the trade agreement, warning that it would expose Slovenian agriculture to unfair competition, undermine European production and animal welfare standards, and place severe pressure on already vulnerable farms.

“In South America, the use of hormones and antibiotics to promote growth is permitted, even though such practices have been banned in the EU for decades. These countries also use plant protection products that are carcinogenic, mutagenic, and similar, which have likewise been prohibited in the EU for decades,” KGZS said in a statement to bne IntelliNews.

The EU-Mercosur agreement, concluded in principle in 2019 after two decades of negotiations, covers the EU and the South American bloc of Brazil, Argentina, Paraguay and Uruguay. It would gradually remove tariffs on most goods and open wider access to markets, including sensitive agricultural products such as beef, poultry, sugar, honey and ethanol.

Supporters argue the deal would boost exports, lower prices and strengthen geopolitical ties with Latin America. Critics, however, warn it risks undercutting EU farmers, weakening food safety and animal welfare standards, and accelerating deforestation in the Amazon and other sensitive ecosystems.

For KGZS, the core problem lies in the imbalance between production standards in the EU and those applied in Mercosur countries.

The chamber says it is opposing the agreement “from the perspective of compliance with production and farming standards that apply in Europe, as these standards are significantly lower in South American countries”.

Animal welfare standards are another major concern. According to KGZS, “in livestock farming, the same animal welfare standards as in the EU are not respected, as battery cages for laying hens are still permitted in South American countries, as well as rearing in extremely confined spaces with high animal density, the keeping of several thousand animals in a single location, and similar practices”.

The environmental impact of the deal is also central to the chamber’s criticism. It underlines that “rainforest deforestation is still ongoing” and warns that Europe would become complicit in this process. “Through this agreement, we will accelerate the destruction of rainforests, and such food will also reach all of us, namely consumers,” it said.

Policy contradiction 

KGZS is particularly critical of what it sees as a contradiction in Slovenia’s own agricultural policy.

“In the Republic of Slovenia, we have further tightened the conditions for the rearing of farm animals and increased animal welfare requirements beyond EU standards,” it said.

“Therefore, we are surprised by the hypocrisy of the government of Slovenia, which tightens farming conditions in Slovenia while simultaneously supporting the agreement, thereby enabling even more intensive rainforest deforestation, an even greater number of animals reared practically without animal welfare standards, and further environmental destruction and pollution through the use of plant protection products and animal feed additives that are not permitted in the EU.”

Economically, KGZS believes the agreement would directly affect several key sectors. “According to our analyses, the sectors most adversely affected will be beef, poultry meat and honey, while indirectly we cannot exclude impacts on other agricultural sectors as well.”

It warns that the deal “opens new procurement channels for the import of food of questionable quality, through which, over time, food products from other sectors not currently covered by the agreement could also enter Europe and Slovenia”.

Even if Mercosur products do not reach Slovenia in large volumes, KGZS says their presence in the wider EU market will still depress prices.

“Regardless of the fact that most agricultural economists and others argue that these products are unlikely to enter the Slovenian market directly, we are convinced that the presence of cheap food products of questionable quality, produced practically without the standards that apply in the EU, will also affect prices on our market.”

It cites calculations by European farming organisations, noting that “the association of European farmers and agricultural cooperatives has already calculated that the agreement could further reduce prices in the primary sector (at farm level) by 10% to 20%”.

Smaller farms exposed 

Small and medium-sized farms are seen as particularly exposed. “Small and medium-sized farms, especially those located in areas with natural constraints (mountain and hilly farms), are particularly exposed to the risks of the agreement,” KGZS said.

If prices fall further, “these farms will cease farming activities, as farming will become even less economically attractive than it already is”.

Preserving them would shift costs to society. “Should the Republic of Slovenia wish to preserve these farms, all citizens will have to provide increased budgetary resources to ensure their survival.”

The chamber criticised the Slovenian government for conducting discussions on the Mercosur agreement without involving farmers’ organisations.

As a result, “we obtain relevant information exclusively from partners in other countries and from the association of European farmers and agricultural cooperatives (Copa-Cogeca)”.

It added: “The Slovenian government has not presented to us any mechanisms for mitigating the risks posed by the agreement.” While it believes that “these risks could be managed through both EU-level and national measures”, it argues that such mechanisms have not been clearly communicated.

KGZS said it opposed the agreement because of the lack of transparent communication with farmers’ organisations and urged the government to do the same until full protections were guaranteed.

Serious consequences 

Looking further ahead, the chamber warns of serious structural consequences. “Slovenian farmers are becoming increasingly well educated, and economic logic is playing an ever stronger role in farmers’ decision-making,” it said. But if profitability declines, “a decline in profitability will inevitably occur, leading to the abandonment of farms”.

Under such a scenario, “over the next ten years we can expect a deterioration in food self-sufficiency and significant environmental changes, as agricultural land will become overgrown”. It also warned that “opportunities for speculative purchases of agricultural land or even entire farms will increase”.

Slovenia’s agricultural structure makes it particularly vulnerable. “Slovenian agriculture is structurally very different compared to the EU average. We have one of the smallest average farm sizes (around 7 hectares in Slovenia, several times higher in the EU, and over 120 hectares in the Czech Republic), and we are the country with the highest share of agricultural land located in areas with natural constraints (over three quarters of all agricultural land lies in such areas).”

Because of this, “we are already witnessing significant downward price fluctuations caused by even minor market disturbances resulting from imports of cheap products”.

KGZS points to recent examples. “Thus, last autumn we experienced difficulties in the sale of potatoes, where self-sufficiency is below 50%, due to imports from other EU countries, even though the volume of imported potatoes during that period was small compared to consumption.”

In pig farming, “we are also recording exceptionally low prices and a crisis in the pig farming sector, where self-sufficiency is likewise very low”.

It explained that “the key problem is the outbreak of African swine fever in Spain and the ban on pork exports to China, which is also reflected in the pig market in Slovenia”. Hence, “we are therefore convinced that any price fluctuation in any EU member state will negatively affect the situation of Slovenian agriculture”.

Contingency planning 

Finally, KGZS points to the European Commission’s own contingency planning as confirmation that the risks are real. “Finally, we would like to add that the European Commission has envisaged a fund of approximately €1bn, which could be activated in the event of excessive price volatility in the EU.”

“This demonstrates that the European Commission itself is aware of the risks posed by the Mercosur agreement and confirms our concerns,” the chamber said, concluding: “We therefore expect the government of Slovenia to protect Slovenian agriculture through EU-level and national measures, as it is significantly more vulnerable than agriculture in the EU as a whole.”

The European Parliament voted on January 21 to send the agreement to the EU’s top court for a legal review, effectively suspending the approval process and potentially delaying ratification by up to two years. The decision was narrowly adopted following mass protests by farmers in Strasbourg.

According to the EU, it is Mercosur’s second-largest trading partner in goods, with exports reaching €57bn in 2024. The bloc also accounts for around a quarter of Mercosur’s total trade in services, with EU exports to the region amounting to €29bn in 2023.

In addition, the EU is the largest foreign investor in Mercosur, holding an investment stock of €390bn in 2023. Despite the scale of this economic relationship, EU exporters and potential investors continue to face significant barriers in Mercosur markets.