China peace plea as barley appeal looms

Australian grain growers have appealed to the Chinese and Australian governments to mend their differences.

“It does feel as if there has been a breakdown at a government level,” the chairman of industry lobby group, GrainGrowers, Brett Hosking told The Australian.

Australian grain growers have appealed to the Chinese and Australian governments to mend their differences as they await news on an appeal against tariffs that have decimated the $1.2bn barley trade with China.

“It does feel as if there has been a breakdown at a government level,” the chairman of industry lobby group, GrainGrowers, Brett Hosking told The Australian.

“You have to have an established dialogue which can continue when there are challenges.

“We have to find a way forward and create opportunities to reopen the dialogue and hopefully work out a solution.”

Mr Hosking, who is a speaker at The Australian’s Global Food Forum which begins on Wednesday, said there was potential $2bn market in China for Australian grain exports including barley, wheat and canola.

But he said barley farmers, which are now beginning their harvest, were facing effectively been locked out of the China market because of the 80 per cent tariffs imposed on the industry in May.

“China is our biggest malt barley market,” he said.

“What we are facing now is that we have our main customer out of the market and we are not sure where our next barley market will come from.”

The industry is calling on the federal government for a $20m industry recovery fund to help maintain ties with China, including boosting the market for wheat, as well as looking for other markets for barley.

It is also believes the funds could be used to help with the establishment of an industry in Australia to process Australian barley into malt which could then be exported into Southeast Asia.

Mr Hosking said there had been strong demand in China for Australian barley in recent years, particularly from the Chinese beer industry which liked the malt that came from the Australian product.

He said Australian barley producers had specially designed their product for the needs of the Chinese market.

“From a trader to trader perspective there is a very positive relationship,” he said.

“They love our product. We are a close source of grain for them.

“We can get the grain there in a timely fashion and our freight costs to China are relatively cheap.”

But he said the imposition of tariffs of 80 per cent effectively knocked the Australian product out of the Chinese market.

He said those few traders in China that had been buying Australian barley for processing into malt for export, through free trade zones in China, were also now wary of buying Australian barley.

He said there was “talk” about Australia taking the issue to the World Trade Organisation, but the situation would be best resolve by country to country discussions.

“The greatest opportunity to solve the problem would come through pure bilateral trade discussions,” he said.

“It is much easier when the Chinese will answer Australia’s phone calls. But if people are not even accepting phone calls it becomes difficult.”

He said Australian barley producers were still hoping that their appeal against the tariff might fall on receptive ears in Beijing.

“We have launched an administrative appeal in China,” he said.

“We have gone back to them and asked them to reconsider having us submit any additional evidence on any area where there might have been a misunderstanding,” he said.

“We are giving them the opportunity to cast a fresh set of eyes over their decision.”

Mr Hosking said that the Chinese government had asked for more time to consider the appeal, which was due to have been decided about now.

“The Chinese have asked for a bit more time to assess it (the appeal),” he said.

“It is a good sign as it means they are taking it seriously.”

Mr Hosking said Australia’s barley trade had hit a high of more than $1.2bn before China’s Ministry of Commerce announced its anti-dumping investigation in November 2018.

The lengthy review saw the imposition of 80 per cent tariffs in May this year which have made Australian barley uncompetitive.

Mr Hosking said news of the tariffs had seen prices for barley drop by $50 a tonne to around $220 a tonne at the time.

Australian wheat farmers were still selling about 10 per cent of their exports or around 1.5 million tonnes to China in a trade worth between $200m to $300m.

He said that had not been affected by any tariffs or non-tariff barriers, although there has been rumours of tighter inspection levels for Australian grains.

He said there was also a potential market for Australian canola which was lower in value but could still be important for the Australian exporters. “If everything was going well there could be a $2bn grain trade with China.”