China’s barley tariff threat baseless: GrainCorp

GrainGorp chief executive Robert Spurway says there is no basis for an 80 per cent tariff on Australian barley exports to China.

GrainCorp chief executive Robert Spurway. Picture: Andy Rogers

GrainGorp chief executive Robert Spurway says there is no basis for an 80 per cent tariff on Australian barley exports to China.

China is threatening tariffs on Australian barley, which would include a dumping margin of up to 73.6 per cent and a subsidy margin of about 6.9 per cent, following the Morrison government’s push at the World Health Assembly for a global independent probe into the origins of COVID-19.

China is pursuing an investigation of its own, in this case an anti-dumping probe of Australian barley, which its Ministry of Commerce launched in November 2018. A dumping tariff is a penalty for selling barley too cheaply, while the subsidy tariff is believed to relate to Australia’s drought support measures and diesel fuel tax rebate.

Mindful of commenting on the outcome of Beijing’s investigation, Mr Spurway told The Australian there was no basis for imposing tariffs on Australian grain. “Clearly, it is our preference that there are no tariffs imposed and it’s our view that there is no basis for them to be imposed,” Mr Spurway said, adding that GrainCorp had no material exposure to China’s barley tariff threat.

“I’m not going to comment at all or speculate on the outcome.

“China is an important customer and we expect it will be an important market for us into the future as well.

GrainCorp closed up 38c at $3.67

“Although we have no material exposure in our outlook, any tariffs imposed on agriculture really have an impact in the long term on Australian growers, and Australian growers are very much part of our network and very important to us. Therefore, achieving a desirable outcome is in our interests and their interests.”

China’s 18-month investigation into Australia’s barley exports was due to be finalised by May 19. Australia has been given a 10-day period to respond to China.

Ms Spurway’s comments follow those of Trade Minister Simon Birmingham who said earlier this week: “We do not accept that there is a prima facie case, let alone a conclusive case, to find dumping by or subsidy of Australian producers.”

Victorian opposition treasury spokesman and former barley grower Louise Staley agreed.

“Australia does not protect our barley growers. We do not sell barley on the international market below Australian prices — in other words we do not dump barley,” Ms Staley said. “That is not the structure of our market. As a former barley grower, we are not subsidised or protected.”

If China imposes the 80 per cent tariff on Australian barley exports, it has the potential to crush Australian barley sales to China, which accounted for about 60 per cent of Australia’s barley exports in the five years to 2018-19.

The heightened trade tensions between the two countries come as GrainCorp swung back into profit following the sale of its Australian bulk liquid terminals and demerger of United Malt.

The group reported a net profit of $388m in the six months to March 31 versus a $59m loss the previous corresponding period. Investors lapped up the news, with GrainCorp’s shares soaring more than 12 per cent to $3.69 in afternoon trade on Thursday, compared with a broader sharemarket fall of 1.4 per cent, before closing at $3.66, up 37c. Mr Spurway said the result reflected a successful repositioning of its portfolio, which included the sale of its Australian bulk liquid terminals business and demerger of United Malt.

Despite battling three years of drought on Australia’s east coast, Mr Spurway said the business was performing well, reporting an underlying net profit of $55m.

“Each of our business segments was up substantially on the prior corresponding period, reflecting GrainCorp’s new operating model and the steps we have taken to manage crop variability and maximise our assets,” Mr Spurway said.

Revenue meanwhile firmed 3.4 per cent to $1.96bn. The company will not pay an interim dividend.