Source: AFP
Three years after steep Chinese tariffs halted imports of Australian barley as tensions rose between the two countries, the wheat is once again flowing freely.
Barley is not only used to make beer but also to feed pigs, and China was Australia’s top market, taking 50 percent of its barley exports.
China has imported 314,000 tonnes of Australian barley worth A$139 million (about $94 million) since the government removed 80.5% tariffs in August, the Australian government said in early December, citing official Chinese data.
The resumption of trade is a welcome relief for Australian farmers, who saw a market of almost A$1 billion evaporate in 2020.
“In the two months since the market opened, Marketing and Trading sent two shiploads of barley to China,” CBH Group, a cooperative of more than 3,500 Western Australian grain farmers, said in its annual report.
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Tensions between the countries began to escalate in 2018 when Australia blocked Chinese telecoms giant Huawei from its 5G network.
Then, in 2020, Australia called for an international investigation into the origins of Covid-19 — an action China saw as politically motivated since it came from a close partner of the United States.
In response, Beijing slapped steep tariffs on Australia’s key exports, including barley, beef and wine, while halting coal imports.
New markets
China’s slowing economic growth has prompted Beijing to rekindle relations with its trading partners.
Meanwhile, Australia has sought and found new markets to offload its crops — it is the world’s third-largest grass producer.
“It made us pivot, so we found new markets, like Mexico. We were able to reduce tariffs, which were previously over 100 percent,” Sean Cole, deputy general manager of the GrainGrowers trade association, told AFP.
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“With China leaving, Australia has really been forced back into more traditional customers in the feed market, mainly the Middle East and Saudi Arabia, where we’ve been for over 20 years,” he added.
From June 2022 to June 2023, Saudi Arabia became the leading importer of Australian barley, according to data from the Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES).
Lyndon Mickel farms a 6,000 hectare property near Beaumont in south-west Australia. The latest harvest of his fields of various grains and peas was the 23rd of his career, but it took time to recover from the Chinese tariffs.
“We had a drop in price, but we were fortunate to have two very good years at the time in terms of crops,” he said, “so what we lost in price, we gained. tonnage anyway”.
But those boom years — producing more than 14 million tons of barley in the last two harvests — are over.
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Additional earnings
As El Nino — the cyclical weather phenomenon responsible for higher global temperatures — returns to the Pacific, ABARES predicts barley production will drop 24% to 10.8 million tonnes for the 2023-24 harvest.
The reopening of the Chinese market could not have come at a better time, said Sean Cole.
“A lot of our barley is classified as feed, but it’s still suitable for beer production in China,” he said, “they use slightly different processes and it basically means we can get a premium for more feed barley.”
On average, barley destined for China sells for “about $38 to $40 a tonne between now and after the tariffs are lifted” and that equates to “an additional $400 million in value to Australia’s barley crop next year , even with a smaller crop,” Cole added.
Source: AFP