The EU’s new free trade agreement with Mercosur brings zero tariffs on soybeans and soybean meal, promising lower costs and reliable supply for Europe’s feed and crushing industries. However, industry leaders warn that new environmental rules and legal uncertainties could offset these gains and threaten Europe’s protein security.
Mercosur deal: Zero soy tariffs
The free trade agreement between the European Union and Mercosur entered into provisional force on 1 May, consolidating zero tariffs on European imports of soybeans and soybean meal from the South American bloc. The treaty also provides for the gradual reduction of tariffs on soybean oil, which, in theory, signals greater predictability and stability for European supply chains.
Under the agreement’s tariff dismantling schedule, crude soybean oil will see tariffs gradually reduced from the current 3.2% to zero over 4 years. Refined soybean oil, currently subject to a 9.6% tariff, will undergo a longer 7-year phase-out period.
Rising legal and supply risks
In practice, however, the European soybean crushing and animal feed industries may face precisely the opposite effect due to the accumulation of new requirements and legal uncertainties.
The warning comes from industry associations, trading companies and representatives of the global grains supply chain amid the combination of new EU environmental requirements, sanitary restrictions and increasingly stringent rules for importing agricultural commodities.
Import dependence exposes vulnerabilities
According to André Nassar, president of the Brazilian Association of Vegetable Oil Industries (Abiove), the simultaneous advance of environmental and sanitary regulations may reduce both imports and Europe’s soybean processing capacity. The European Union is highly dependent on soybean and soybean meal imports to supply its animal protein chains.
Eurostat data show that, in 2025, Brazil accounted for 6.1 million tonnes of soybeans exported to the EU, generating around €2.3 billion in trade value. The volume makes the country Europe’s leading supplier.
In soybean meal, European dependency is even more evident. In 2025, the European Union imported 10.9 million tonnes of Brazilian soybean meal, equivalent to approximately €3.5 billion. Argentina ranked as the second-largest supplier, with 6.9 million tonnes.
According to Nassar, the problem goes far beyond agricultural trade and directly affects the supply security of Europe’s own industry.
“If soybean consumption declines, the EU will produce less meal. And that is very bad for the European animal industry,” he says.
He points out that alternative crops such as rapeseed and sunflower produce less meal compared with soybeans, increasing pressure on the feed sector.
EUDR: Higher costs, more uncertainty
Despite being postponed twice, the European Union Deforestation Regulation (EUDR) continues to generate concern among both South American exporters and European importers. This regulation requires companies to prove that products such as soy, beef and coffee that are imported into or sold within the EU are not linked to deforestation after 2020. From next year onwards, the rule is expected to become mandatory for imports of soybeans and soy-derived products.
Among the requirements are detailed traceability regarding product origin and proof that no deforestation occurred in the production areas.
Although the Brazilian sector already has traceability programmes, market operators believe the practical application of the regulation still contains uncertainties and is likely to increase logistical costs. The requirement for physical segregation of traceable soybeans is considered one of the most sensitive points.
“This verified soy cannot be mixed with a product that is not traceable. That directly impacts logistics and makes soybean meal more expensive,” says Nassar.
Beyond operational costs, the executive also highlights the lack of precedent for a system of this complexity on a global scale. “There is also uncertainty. This has never been done before at this level,” he says.
According to him, the concern is that rising costs and regulatory risks may discourage European soybean imports, placing even greater pressure on the local crushing industry.
“There will be enormous pressure on both the crushing industry and the European feed industry,” he says.
The postponement of EUDR implementation on 2 occasions itself reflected the operational difficulties faced by the European industry.
“They were the ones asking for postponement because they are highly dependent on imported meals,” Nassar reveals.
ILUC rule threatens soy imports
Another area of concern is the so-called ILUC rule, the acronym for indirect land-use change. The European Commission has already published the delegated act on the issue and may implement it at any moment, possibly as early as the beginning of August.
In practice, classifying soybeans as a “high-risk” environmental product would place the commodity in the same situation as palm oil under European biofuel policies.
“Soybeans would be considered high ILUC-risk, like palm oil. That practically makes imports unviable. The potential impact extends beyond biodiesel,” argues Nassar.
The new rules may reduce local meal production and further increase the external dependency of European livestock production.
“What we still do not know is what the impact on soybean meal will be. Perhaps it will not affect it as directly because the EU cannot replace soybean meal in the same way it can replace oil,” says Nassar.
Uncertainty over HB4 soybeans
In addition to environmental requirements, another sensitive issue for the European market is HB4 soybeans, a genetically modified variety with greater tolerance to heat and water stress. The technology has been introduced experimentally in agricultural areas across South America and is seen by the sector as an important tool in the face of climate change.
The problem is that the European Union has still not commercially approved the technology. According to industry sources, there is concern over the possible mixing of the variety with conventional commodity shipments. Indeed, HB4 soybean cargoes exported by Brazil and Argentina were rejected at ports in the Netherlands in April.
Currently, the European tolerance threshold for unauthorised presence is only 0.01%. The international grains sector advocates this limit to 0.1%, but no regulatory consensus has yet been reached.
The discussion may involve global private entities as well as the European Commission. In the view of market agents, the absence of regulatory harmonisation increases commercial and logistical risks. According to industry sources, the issue will not be resolved until it is properly regulated.
