Barley growers scramble to replace trade after China’s knockout blow

Barley growers, facing losses of up to $45 a tonne after China whacked Australian imports with tariffs of 80 per cent, are scrambling to replace the loss of the billion-dollar trade.

GRAIN farmers have been left reeling after China made good on threats to whack Australian barley imports with tariffs of 80 per cent.

Barley growers are already facing losses up to $45 per tonne, as they scramble for new markets to replace the loss of the lucrative billion-dollar Chinese trade.

Farmers are now urging the Federal Government to work with China to get the duties reversed as soon as possible, amid concerns they are becoming collateral damage in the rising political tensions between the two countries.

“Farmers should be genuinely upset … the decision is not justified,” GrainGrowers chairman Brett Hosking said.

“I don’t know whether it is about politics or not or whether it is just a massive misunderstanding. I’m not sure what else we could have done … the Government has worked quite hard on this and the real challenge now is for them to step up and see what they can do about getting it reversed.”

The tariffs were first flagged just weeks after China’s ambassador to Australia Cheng Jingye warned there could be economic repercussions for Australia pursuing an independent inquiry into the origins of the coronavirus pandemic; others have speculated the barley tariffs are retaliation for Australia imposing anti-dumping duties on Chinese aluminium and steel.

The Federal Government has rejected suggestions Australia has found itself in a politically-motivated trade war with China, maintaining the barley issue was completely separate to the diplomatic dramas.

China locked in the tariffs – a 73.6 per cent dumping duty and 6.9 per cent subsidy duty – late Monday, a day before its final determination on its 18-month anti-dumping investigation was due. The scale of the duties effectively knocks any Australian exporters out of the market.

China argues Australia’s barley farmers have benefited from subsidies such as irrigation upgrades in the Murray Darling Basin and support payments such as Farm Household Allowance, allowing them to dump product below market price – claims Trade Minister Simon Birmingham labelled “completely ridiculous” given the bulk of barley was the product of dryland farming.

“The Murray-Darling Basin is nowhere near Geraldton or other parts of the barley-growing world and I think it demonstrates the absence of factual analysis in the decision that’s been made by China,” Mr Birmingham said.

Australia has reserved its right to take the issue to the World Trade Organisation, with Mr Birmingham indicating “there may be other paths we choose to pursue first”.

With any WTO dispute likely to drag out for years, the National Farmers’ Federation is urging for a diplomatic solution, mindful that up to 30 per cent of Australian ag exports go to China.

“It is the NFF’s strong hope that a resolution that is satisfactory to both parties can be reached sooner rather than later, to avoid unnecessary detriment to Australian farmers and Chinese consumers,” NFF chief executive Tony Mahar said.

Australia had long been the largest supplier of barley to China, exporting almost 6.5 million tonnes in 2017-18; but that dropped to about 2.4 million in 2018-19, due to China’s investigation and the ongoing drought.

Rabobank senior grains and oilseeds analyst Cheryl Kalisch Gordon said China’s barley tariffs would cause feed prices to suffer more than malting barley.

As of Tuesday morning, Dr Kalisch Gordon said the Kwinana price of feed barley was sitting at $250 a tonne, compared with $295 a tonne before China mooted the hefty tariffs.

However, China was unlikely to be a strong market this year. Beer sales are down due to COVID-19 restrictions while China’s need for feed barley has dropped after its pig herd was decimated by African Swine Fever.

“I think they will still look to Australia for malting barley, but they will have to work that out on their end,” Dr Kalisch Gordon said, adding that the tariffs would lead to a greater spread between the two barley prices.

Victorian Farmers Federation president David Jochinke said the timing of the decision was “absolutely tragic for farmers who have finished their cropping program and are now committed to their rotation including barley”.

“Since China has been our major exporter, this will have a huge effect on the final price farmers will receive for their barley,” Mr Jochinke said.

“If this decision would have been earlier, farmers would have been able to change their programs to accommodate it.”

Mr Jochinke said the Government needed to recommit to Australia’s partnership with China while also “vigorously” search for other markets for farmers to sell their barley into.

Agriculture Minister David Littleproud said Australia would continue looking for new markets for barley, with increased access opening to India in the past week, while the new free trade agreement with Indonesia will allow for up to 500,000 tonnes of feed grains to be exported from July.

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Mr Littleproud warned it was not just Australian farmers who would be affected, noting Chinese buyers would now need to source significant volumes from other markets “for feed, for mulch, for their beer, and it’s not going to be the quality that Australia produces”.

Though China has indicated the tariffs will be in place for five years, China can choose to remove them anytime before then. In 2018, China whacked US sorghum with an anti-dumping tariff of almost 180 per cent; it was removed six weeks later.

Mr Hosking said he hadn’t ruled out a breakthrough in negotiations with China or new barley markets emerging before farmers started harvesting their crops in late spring and early summer.

“I’m hopeful that by harvest we might have some new opportunities and possibly things may have been resolved a little bit – but harvest is still a long way away,” he said.

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