China back on the agenda for agribusiness exporters

After years of trade barriers, producers are gearing up to re-establish ties with Chinese customers, keen to resupply potentially the biggest single market for many Australian agricultural products.

The Australian’s 14th Global Food Forum gets underway in Brisbane next week, with the agricultural industry taking a new look at its biggest potential export market.

Producers of beef, wine and barley are benefiting from a removal of tariff and non-tariff barriers by China in recent months in the wake of the improved political ties under the Albanese government.

After years of trade barriers, they are gearing up to re-establish ties with Chinese customers, keen to resupply potentially the biggest single market for many Australian agricultural products.

The 2024 forum is being held against a background of optimism that specific barriers to trade have been lifted for certain goods, but there have been lessons from the imposition of trade barriers.

July 2024 sees a combination of optimism by specific sectors that the China market has reopened, tempered by an awareness of the potential for future trade disruptions in the event of political tensions.

There is no other market like China for its size when it comes to Australian agricultural exports, but the events of the past few years will not be forgotten.

The managing director of Hugh Hamilton wines, the sixth generation of an Australian wine making family, Mary Hamilton, a speaker at next week’s forum, is one of those already gearing up to resume selling her wine to China.

A shipment is already on its way to China, with Hamilton saying she is optimistic about the future of the market.

But she still asks the question: “The next time the two governments are having a fight with each other, are we going to see the market turned off again?”

She warns that the Australian wine industry needs to learn the lesson from the experience of the past few years, actively seeking out other markets for wine even if they are smaller than China’s.

She cites markets such as Vietnam, Indonesia and Malaysia as placed to become more active.

“The Australian agricultural producers who were hit with restrictions have mostly bounded back into the Chinese market once they (tariffs) were removed,” James Laurenceson, director of the Australia-China Relations Institute at Sydney’s UTS, tells the Australian.

“Over the past year, two-thirds of Australia’s barley exports went to China,” he says.

“The tariffs on Australian wine were removed in late March, and by May Australia was on the cusp of toppling France to become China’s leading supplier once again.”

Still waiting on the sidelines for a change of heart in Beijing are lobster producers, who once had a thriving business selling to Chinese diners.

“Seafood exporters are the final group still waiting, but they’ll expectedly rush back because China accounts for 90 per cent of global rock lobster imports,” Laurenceson says.

He says there have been different lessons learned from the sanctions imposed by China of recent years depending on the nature of each commodity.

“Australian agricultural exporters were left with one of two lessons,” he says.

“Most found that if Beijing decided to play nasty, they could handle the risks. They didn’t need to invest heavily in diversification because there was already a willing global market out there wanting to buy their output.

“But a smaller group found there was simply no alternative to China. For them, diversification might be nice in theory but mostly a mirage in practice. They need to find a different way to manage potential fallout.”

When it came to barley, growers did manage to find markets in other countries, but it was nowhere near as lucrative as the China market.

“Barley growers gained confidence that they could sell their output elsewhere if Beijing decided to play nasty,” he says. “But if the China market was open, it gave them the best margins.”

Laurenceson says Australian wine growers hit by the imposition of tariffs in 2020 found difficulty in finding the same opportunities in other markets.

Agriculture has long been one of the backbones of the Australia-China trade relationship given the complementarity between China’s demand for high quality food and Australia’s role as a producer of agriculture beyond the needs of its domestic population.

The market was given added impetus following the implementation of the China-Australia Free Trade Agreement which came into force in December 2015.

In the early days of the Global Food Forum the discussion about the potential markets in China was an overarching theme.

The trade tensions since 2019 have seen the debate tempered.

The agricultural trade has held up remarkably well despite actions taken against some products.

In 2022-23 China was the largest single importer of Australian wheat, making up 23 per cent of total exports, and the largest importer of beef, responsible for buying some 21.5 per cent of Australian beef exports.

The beef figure came despite the bans on eight abattoirs around the country imposed in 2020 which had previously supplied a $1bn worth of beef to China.

When it comes to meat excluding beef, China was the second biggest export market for Australia in 2022-23, buying 19.1 per cent of the total, just under the 21.9 per cent of exports bought by the US.

Total exports of Australian agriculture, forestry and fisheries (the ABS statistical category) to China rose to $16.8bn in 2019, falling to $11.8bn during the Covid year of 2021 and rising to a record of more than $17bn in 2023.

The Costa Group, whose chief executive Marc Werner will also attend the forum, already sells citrus into China but is keen to expand sales to include blueberries and avocados.

On the ground, for those directly benefiting from the end of trade restrictions, there is an optimism and an eagerness to make up for lost time.

NSW beef farmer Robert Mackenzie is looking forward to hosting a delegation from China to his farms next month following Beijing’s move to lift the ban on an abattoir he had been using to export his beef.

“Everything’s going well,” he says. He describes the news in May that the ban on the abattoir in northern NSW was lifted, along with bans on four other sites, as “fabulous.”

Having developed strong ties with his buyers in China over several years before the bans struck down his exports in 2020, Mackenzie never wavered in his view that one day he would return to the market reuniting with his old customers.

The potential of the China market will continue to be a theme in any discussion of opportunities for the agriculture industry, but next week’s Global Food Forum can be expected to take a more seasoned view, distilling some of the lessons of the past few years.