Agriculture and food production—including fisheries—are strategic sectors for the European Union. The agri-food system, built on the foundation of the single European market, generates more than €900 billion in value added. However, its competitiveness is increasingly under pressure from Ukrainian exports, soon also from Mercosur countries, and rising demands from consumers and the Green Deal. Without compensation, farmers may find it hard to cope with these growing challenges.
“EU agriculture is currently in a mixed situation,” explains Prof. Aleksander Grzelak, from the Department of Macroeconomics and Food Economy at the Poznań University of Economics. “Some farms, especially those linked to export markets—like poultry producers in Poland—are doing well. But other production areas are facing difficulties, sometimes worsened by global competitiveness, such as grain pricing.”
According to the European Commission, the EU agri-food system generated over €900 billion in value added in 2022 and employs around 30 million people, which is 15% of the total EU workforce. The EU, as the world’s largest exporter of agri-food products, has steadily increased its trade surplus, reaching €70 billion in 2023. However, the EU remains heavily dependent on imports in sectors like fisheries, aquaculture, oilseeds, and high-protein crops.
“The outlook for agriculture will likely become even more complex and challenging,” Prof. Grzelak warns. “There’s a clear risk that overall conditions could worsen, though the impact will vary by sector and region.”
The agri-food sector has shown resilience during recent shocks such as the pandemic and soaring production costs. Still, geopolitical tensions, the impact of extreme weather events, environmental degradation, and structural changes threaten the profitability and strategic autonomy of EU agriculture.
Mercosur, Ukraine, and the Price of Competition
Farmers are particularly worried about instability and uncertainty—especially in light of trade liberalization with Mercosur and growing Ukrainian exports.
“If the Mercosur agreement goes into effect, and if trade with Ukraine becomes more liberalized, EU farmers will struggle to remain competitive,” Grzelak explains. “At the same time, societal expectations are piling up: food must be safe, plentiful, affordable, and environmentally friendly, without harming the climate. That’s extremely hard to achieve.”
This concern is echoed by the 2024 Eurobarometer, which found that 92% of EU citizens consider agriculture and rural areas important for Europe’s future, with half saying they are very important. Key public expectations include stable food supply (94%), affordable prices (92%), sustainable natural resource management (91%), and strengthening the farmer’s role in the supply chain (90%).
“These expectations are difficult to reconcile with the challenges agriculture is currently facing,” Grzelak says.
Budget Cuts and the Need for Incentives
Grzelak emphasizes the importance of financial incentives for farmers, not just regulatory changes. While agriculture and rural development still account for over 30% of the EU budget, this share has dropped significantly from more than 50% in past decades.
“With Mercosur’s export potential and increased Ukrainian output, the pressure for compensation mechanisms is unavoidable,” he explains. “If we ask farmers to produce competitively in a clean, climate-neutral way, then financial support is essential.”
The Common Agricultural Policy (CAP) remains the second-largest area of EU spending under the current 2021–2027 budget. However, its share is gradually shrinking due to policy reforms and the rise of new EU priorities, especially in security and defense. Farmers fear that agriculture may lose even more ground in the 2027–2034 financial framework.
Research from the Institute of Public Affairs shows that most farmers support environmental and climate protection. As many as 60% favor linking EU subsidies to climate and environmental efforts. However, current climate policies add burdens, obligations, and restrictions, leading to dissatisfaction.
The Green Deal Needs Carrots, Not Just Sticks
“The Green Deal was launched with more of a ‘stick’ than a ‘carrot’, which didn’t sit well with many farmers,” Grzelak notes. “Farmers prefer evolutionary change, not revolution. If you want them to accept new rules and institutions, they need to understand and see value in them.”
He advocates for greater involvement of farmers in shaping the European Green Deal, which aims for climate neutrality by 2050. In 2024, protests erupted across Europe over regulations such as fertilizer restrictions and mandatory fallowing of arable land.
“From a farmer’s perspective, that means lower yields and income, reducing their global competitiveness,” says Grzelak. “If at the same time they’re expected to compete with Mercosur imports, frustration is inevitable.”
“Awareness alone isn’t enough,” he adds. “If farmers are told to leave fields unsown or plant forests or grass instead of crops, they lose income—and without sufficient economic support, that burden becomes unsustainable.”
Source: ManagerPlus.pl
Original Interview: Prof. dr hab. Aleksander Grzelak, Poznań University of Economics
Agency: Newseria Biznes
