The world’s largest meat company JBS could earn €1.7 billion (US$1.9 billion) in additional profits by 2040 if the highly contested EU-Mercosur trade deal is adopted, according to new analysis by Profundo. The Dutch research platform argues that new environmental damages might accompany extra profits, given that activists have repeatedly linked JBS to deforestation. 

The EU-Mercosur agreement features a new quota of 99,000 metric tons of beef from Mercosur countries, entering the EU at a reduced 7.5% tariff. This quota is to be phased in over five years. Additionally, 180,000 metric tons of poultry would enter member states duty-free.

Profundo’s calculation accounts for the potential profits that JBS could gain from the reduced tariffs on meat and the possibility that more meat could be shipped under the new quota.

“We assumed that the benefit of lower tariffs would be shared between JBS and its EU customers, and we assumed that the extra quota could lead to extra volume sales in line with the extension of the quota,” Gerard Rijk, equity analyst at Profundo and co-author of the report, tells Food Ingredients First, outlining the assumptions that support the €1.7 billion profit estimate.

New quota and import volumes

The two regions signed the deal in December 2024 after over two decades of negotiation between the EU and the four countries of the Mercosur economic bloc — (Argentina, Brazil, Paraguay, and Uruguay).

It aims to reduce trade tariffs and barriers, giving Mercosur countries better access to EU markets for agricultural exports like beef, poultry, and sugar.

In return, the EU will face lower tariffs on cars, machinery, and chemical exports. The agreement needs to be ratified, requiring endorsement from member states and the European Parliament, with a mid-2025 deadline.

Profundo’s study cites data claiming that JBS supplied around 46,000 metric tons of beef in 2023 and 200,000 metric tons of poultry products to EU markets. It also exports massive pork volumes but currently sells negligibly to the EU.

The study notes that an increased quota would mean more competitively priced meat. Assuming that the demand for high-priced meat remains intact, this could generate additional demand and lead to increased EU imports.

Rijk adds that it is “very realistic” that the Brazilian multinational will grow its revenue in the EU and earn the projected profits “as it is a commercial company with leading positions in these crucial meat markets and flows between Mercosur and the EU.”

According to the report, the deal’s benefits will last not just until 2031 but for many years. JBS’ profit could amount to €1.2 billion (US$1.3 billion) by 2040 when taxed.

Could EU-Merscosur undermine EUDR?

The European Commission stresses the pact will strengthen climate change with “strong, specific, and measurable” commitments to stop deforestation.

But environmental organizations have warned that the commodities covered by the Mercosur deal are some of the biggest drivers of deforestation and could therefore, “weaken” EU Deforestation Regulation (EUDR) commitments.

“The EUDR is a pioneering law that guarantees European consumers that products made out of commodities like soy, beef, wood, and palm oil on supermarket shelves are free from deforestation. However, EU-Mercosur has no mechanisms to ensure compliance with the EU deforestation regulation,” Lis Cunha, Greenpeace EU trade campaigner, tells Food Ingredients First.

“On the contrary, new provisions were recently added to the EU-Mercosur text which will weaken the regulation’s implementation and enforcement when it comes to agricultural imports from Mercosur.”

She flags that a new mechanism was recently added to the text, which allows Mercosur nations to file complaints against the EUDR and be entitled to financial compensation.

In addition to environmental lobbyists, farmers in France, Belgium, Poland, and Bulgaria, among other countries, have fiercely opposed the EU-Mercosur deal, fearing its impact on their livelihoods.

Rijk says that the impact of increased meat imports on the EU meat market is relatively limited, “but overall, it means that the gain for JBS and its colleagues like Marfrig is a loss for EU farmers.”

“The impact per EU farmer can vary. The exact impact on ecological farmers and smallholders in Mercosur has not been investigated,” he says.

Cunha emphasizes that centering corporate interests can impact sustainable food producers and farmers. “They already now find themselves squeezed by international agrochemical, food, and retail corporations in both regions of the Atlantic.”

“The agreement boosts export-oriented industrial agriculture, through its agricultural quotas and tariff reductions, to the detriment of food sovereignty — impacting small food producers and sustainable farmers in the EU and Mercosur alike.”

An “important message” here, Rijks says, is the extent to which the deal could undermine the EU’s environmental and climate objectives through reduced tariffs.

“While EU farmers are focusing more and more on climate and planet-friendly operations (also through EU and national regulation), the deal offers improved access for companies that are linked to deforestation in many publications/reports/alerts and which are doing their best to greenwash as much as possible,” he concludes.

JBS did not immediately respond to requests for comment.