Grapegrowers hopeful of China wine trade breakthrough

Australia’s battling wine grape growers are hoping China lifts its ban on barley after the Prime Minister said wine would be next on the table for discussion.

EMBATTLED grape growers have welcomed predictions that wine could be next on the menu to have Chinese sanctions lifted should Beijing remove its ban on Australian barley.

Riverina Winegrape Growers Association CEO Jeremy Cass said while producers desperately needed the Chinese market to reopen, he also warned that it had changed shape since 2020 and urged exporters to be less reliant on China.

“It is something we are all wanting and needing and people will breathe a little easier,” he said.

“The last 12 months have been dreadful and it might be the kicker growers need to bounce back. It will likely be a slow process before we see anything if it happens, but as an attitude adjustment I think it will work well.”

PICTURE: ZOE PHILLIPS

Speaking to Sky News on Wednesday, Acting Prime Minister Penny Wong gave the nation’s wine growers hope that the massive Chinese market could be restored should the barley truce signal an end to the war.

“We’ve still got a way to go, but we are seeking to have a pathway to clear that impediment, and if that works we will work to apply that to other Australian products, probably the next one I would want to look at is wine,” she said.

Australian agriculture has been one of the sectors hardest hit by China’s trade war, sparked after former prime minister Scott Morrison pushed for an inquiry into the origins of the Covid-19 pandemic.

China targeted Australia’s $14 billion in ag exports in retaliation, starting with crippling tariffs on barley in May 2020 and continuing with hits on wine, beef, timber, lobster, cotton and coal.

Australian wine exports went into freefall after tariffs of more than 200 per cent were slapped on in November 2020, with $844m in lost sales over the period in the first 18 months alone.

The big slump saw wine exports to China sag from $1.1 billion in 2020 to just $25 million in the 2021-22 financial year.

China this week said it would review the heavy tariffs it imposed on Australian barley in 2020 after Australia agreed to temporarily suspended a World Trade Organisation appeal against the tariffs.

Acting Prime Minister Penny Wong tells media the Australian Government has reached an agreement with China that creates a pathway towards resolving the dispute over Australian barley. Picture: NCA NewsWire / Naomi Jellicoe

However, Mr Cass warned that a reentry would see a different playing field than what the industry was locked out of in 2020 and urged the industry to continue developing inroads into nations such as India.

“They would be silly to be burnt twice. But China was such a shining star (pre-Covid) and they couldn’t keep up supply, so they shut other markets to make better profits in China and that backfired on them big time,” he said.

“I would like to see a slow comeback. We have already lost market share to South America and South Africa and some other countries so the market will probably not be as big as it was there before.

“And China might also look at what they were paying before and think that was a little bit too much, there will be some negotiations needed even after the doors open to understand exactly where we are at.

“In some ways that will be a good thing because some people may not be as blasé about how they behave like before.”

Excluding mainland China, Australian wine exports increased in value by 7 per cent to $2.03b due to growth in Singapore, Hong Kong, Thailand, South Korea, India, Japan and Taiwan in 2021.

Meanwhile, Mr Cass said the 2023 wine grape harvest was down 50 per cent on last year due primarily to downy mildew infections across major wine grape growing regions.

And while white grape prices have held at similar rates to last year, the price of red grapes has dropped well below the cost of production due to supply chain bottlenecks creating oversupply issues.

“Wine has not inflated at all and the prices coming back to growers have not increased but all the input costs have and so have interest rates, most of these guys have some sort of debt and it will be difficult to service them in the next year,” Mr Cass said.