EU Proposes €45 Billion Early Farm Funding to Secure Mercosur Trade Deal After 25 Years of Talks

The European Union is moving forward with a plan to unlock 45 billion euros in early funding for its Common Agricultural Policy (CAP), aiming to secure support for the long-delayed EU-Mercosur trade agreement. The proposal, announced by European Commission President Ursula von der Leyen, comes just days before a key summit scheduled for Monday in Paraguay, where EU and Mercosur leaders hope to finalize the free trade deal after more than 25 years of negotiations.

In a letter sent to the presidents of the European Council and Parliament, von der Leyen outlined her commitment to provide European farmers with early access to about 45 billion euros from the CAP budget for 2028-2034. The funds would be available as soon as 2028, allowing member states to use up to two-thirds of the resources typically reserved for mid-term review. Von der Leyen emphasized that this move is designed to ensure fair income for farmers, long-term food security, and improved living standards in rural areas.

The announcement follows months of protests by European farmers, who have expressed concerns about increased competition from South American imports under the proposed trade agreement. In December, Italian and French opposition blocked progress on the deal, with farmers staging demonstrations in Brussels against both the CAP and the Mercosur agreement.

Italy responded positively to von der Leyen’s proposal. Prime Minister Giorgia Meloni released a statement calling it a “positive and significant step forward” in EU budget negotiations. Italian Agriculture Minister Francesco Lollobrigida estimated that Italy would receive about 10 billion euros in additional funding, on top of the 31 billion already allocated for 2028-2034. These funds are not new but are being made available earlier than planned and must be used specifically for agriculture. According to Lollobrigida, this measure cancels a previously expected 22% cut in Italy’s agricultural funding and could even result in an increase compared to the previous period.

The EU-Mercosur agreement would eliminate tariffs on 91% of EU exports to Argentina, Brazil, Paraguay, and Uruguay. This is expected to save European businesses over 4 billion euros annually in customs duties. For example, current tariffs reach up to 35% on wine, 10% on olive oil, and 28% on dairy products exported from Europe. The deal also promises improved access to critical raw materials and rare earths from South America—resources currently dominated by China.

Despite Italy’s shift toward supporting the agreement, France remains cautious. French officials have demanded guarantees that imported agricultural products will meet EU health and environmental standards—a principle known as reciprocity. The issue is set for discussion at an upcoming meeting of EU agriculture ministers.

The final decision rests with a vote by ambassadors from all 27 EU member states, scheduled for Friday in Brussels. The agreement requires a qualified majority; opposition from just four countries representing at least 35% of the EU population could block it. Hungary and Poland have already stated their opposition, while Belgium and Austria are expected to abstain.

If approved, von der Leyen is expected to travel to Paraguay next week to sign the agreement on behalf of the EU. The deal would open a market of 270 million consumers in South America to European exporters and mark a major step forward in transatlantic trade relations.

The early release of CAP funds appears aimed at easing concerns among skeptical member states and their farming sectors. While some farmer organizations remain wary of increased competition from Mercosur countries, supporters argue that the agreement will bring significant benefits across multiple sectors—including agriculture—by reducing export costs and expanding market access.

As negotiations continue this week in Brussels and capitals across Europe, all eyes are on whether France will join Italy in backing the deal or maintain its reservations. The outcome will determine whether one of the world’s largest free trade agreements finally moves forward after decades of debate.