How our rock lobster, wine, forestry and grain industries will tackle China trade war in 2021
Jobs are at risk. Farmers are planting entire new crops. There are pleas for cuts in fees. SA’s industries have been rocked by China’s trade war.
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The rock lobster industry is desperately calling for a reduction in licence fees to help keep the sector that employs more than 1000 South Australians afloat.
Trade tensions with China have reached far and wide and rock lobster fishers are among those hardest hit, with the country usually taking in more than 90 per cent of our exports.
It comes as farmers will this year change their crop plantings, wine producers seek new markets and the timber industry moves towards local manufacturing in a bid to cushion the blow left by China imposing tariffs and banning exports on a range of produce.
SA sent more than $72m worth of rock lobster to China in 2018-19, when exports were at their highest levels, but since September, that market has disappeared.
These figures do not include SA rock lobster exported through Melbourne.
Kyri Toumazos, of the SA Northern Zone Rock Lobster Fishermen’s Association, said the industry had found other markets in Japan, Taiwan, the US and Europe.
But he said it would not be competitive against other producers unless State Government-imposed licence fees were reduced.
The industry is desperately calling for a reduction in licence fees to help keep the sector that employs more than 1000 South Australians afloat.
Trade tensions with China have reached far and wide and rock lobster fishers are among those hardest hit, with the country usually taking in more than 90 per cent of our exports.
SA Northern Zone Rock Lobster Fishermen’s Association executive officer Kyri Toumazos estimated the state had already lost about $60m in revenue since September as the Chinese market closed off, and if the status quo remained, it would reach about $100m by March.
It comes as farmers will this year change their crop plantings, wine producers seek new markets and the timber industry moves towards local manufacturing in a bid to cushion the blow left by China imposing tariffs and banning exports on a range of produce.
Mr Toumazos said the industry had found other markets in Japan, Taiwan, the US and Europe, but would not be competitive against other producers unless State Government-imposed licence fees were reduced.
“Our cost of production is the highest of any rock lobster fishery in the world,” Mr Toumazos said.
He said the industry had stepped up calls for the Government to lower licence fees, which cost fishers in his zone about $6/kg. Fishers also wanted the 2019-2020 fees waived.
“We know where the secondary markets are – we’ve established them – but we cannot service them with our current cost structure,” he said.
“The pandemic absolutely destroyed the viability of the industry, followed by the trade disruption. It’s the most challenging time the industry has faced for probably three or four decades.”
Mr Toumazos said fewer than half of the state’s 245 rock lobster boats were now fishing at their usual capacity, risking the viability of jobs – along with the futures of coastal towns.
Meanwhile, China has imposed an 80 per cent tariff on barley, and Grain Producers SA chairman Adrian McCabe said farmers would be rethinking their crops this season.
“People will be looking for where they can rotate out of barley,” he said.
“SA exports more than 1.5m tonnes of barley each year, worth $300m, and China is the single biggest market, making up more than half of the barley exports.”
The tariffs are expected to cost the country up to $500m this year.
“We’re out of drought with the biggest national harvest probably on record, which means we’re really relying on overseas markets this year because the domestic market had been flooded with grain,” Mr McCabe said.
“We’re back into a massive exporting surplus, which has put us smack bang into China’s line of fire.”
Wine SA chief executive Brian Smedley said his industry, too, was exploring new markets. Late last year, China imposed tariffs of up to 212 per cent on Australian wine in response to its anti-dumping inquiry, effectively closing off that market.
It has huge implications for SA, which exports about $700m in wine to China each year – the lion’s share of Australia’s $1.2bn in exports.
“Product that may not have been available to Australia is now possibly available, so is there interest in that style of product?,” Mr Smedley said.
“It’s like the crayfish issue – it wasn’t available to a lot of us and it now is.
“We (also) already export to over 100 countries and so each of those countries has merits.”
David LeMire, co-owner of Shaw + Smith in Balhannah, said the Adelaide Hills was less vulnerable to the market changes because it specialised in whites and sparkling wines, as opposed to reds, which were most popular with the Chinese.
However, he said the tariffs would also cut off access to longer-term trade opportunities.
“You could lose a generation of Chinese wine drinkers,” he said.
Mr LeMire said the Federal Government should consider providing funding for Wine Australia, because the organisation was likely to receive less money through industry levies this year.
“If production drops … our ability to market Australian wine will decrease at the exact time when we need it most,” he said.
In the timber industry, key players are calling for help to expand local manufacturing after China banned all log imports from SA, Tasmania, Victoria and Queensland.
Forestry heavyweights say more local manufacturing will boost the regions as well as reducing the sector’s reliance on overseas markets.
“What we want to do is create a stronger, more competitive forest products industry here in SA – one that brings back the focus on domestic manufacturing and opportunities to use our fibre on shore,” said South Australian Forest Products Association chief executive Nathan Paine.
“Part of that is looking at how we use regional growth funds to support businesses which in turn support jobs in regional areas.”
About 150 people have already been stood down from harvest and haulage jobs in the Green Triangle, which includes plantation areas across the South-East and southwestern Victoria.
Green Triangle Forest Industries Hub chairman Ian McDonnell said the industry also needed solutions to other expansion barriers, including limitations on how much water could be drawn from aquifers to sustain trees.
Primary Industries Minister David Basham said he was working with industry and the Federal Government to provide support to industries affected by trade tensions.
“There are multiple grants programs available to businesses … and just last month we announced more flexible fisheries management arrangements including quota carry-over for fisheries such as rock lobster,” he said.
“We will continue to help our different primary industries sectors expand market opportunities moving forward but for now I encourage all South Australians to get behind our producers and ensure they buy local.”
Trade Minister Dan Tehan said Australia was seeking a free-trade agreement with the UK that would eliminate tariffs for all goods, along with trade deals with the EU and India.
He said the Government was also exploring free trade agreements with European Free Trade Association countries and Israel.
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