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Three years after high Chinese tariffs halted imports of Australian barley as tensions between the two countries rose, grain is flowing freely again.
Key points:
Australian barley prices fell as China announced an 80.5 percent tariff in 2020.
The country removed the tariff in August 2023 and has since imported $139 million worth of Australian barley.
Producers say the tariffs led them to find new markets, but they welcome the return of the Chinese market.
Barley is not only used to brew beer but also to feed pigs, and China was Australia’s main market, absorbing 50 per cent of its barley exports.
China has imported 314,000 tonnes of Australian barley worth $139 million since it removed its 80.5 percent tariffs in August, the federal government said in early December, citing official Chinese data.
The resumption of trade is a welcome relief for Australian farmers, who saw a nearly $1 billion market evaporate in 2020.
“In the two months after the market reopened, Marketing and Trading shipped two vessels of barley to China,” the CBH Group, a cooperative of more than 3,500 Western Australian grain farmers, said in its annual report.
Barley prices fell when China announced the tariff in 2020. (ABC Rural: Lucinda José)
Tensions between the two countries began to rise in 2018 when Australia excluded Chinese telecoms giant Huawei from its 5G network.
Then in 2020, Australia called for an international investigation into the origins of COVID-19, a move China considered politically motivated as it emanated from a close partner of the United States.
In response, Beijing imposed high tariffs on key Australian exports, including barley, beef and wine, while halting its coal imports.
New markets
A slowdown in China’s economic growth has prompted Beijing to revive relations with its trading partners.
Meanwhile, Australia sought and found new markets to sell its crops: the country is the world’s third largest producer of arable grain.
“This made us pivot, so we found new markets, like Mexico. We managed to reduce tariffs, which were previously over 100 percent,” Sean Cole, acting director general of the GrainGrowers trade association, told Agence. France-Presse news agency.
“With the demise of China, Australia was really forced to return to more traditional customers in the feed market, mainly the Middle East and Saudi Arabia, where we have been for more than 20 years,” he added.
Between June 2022 and June 2023, Saudi Arabia became the largest importer of Australian barley, according to data from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).
Lyndon Mickel farms a 6,000 hectare plot of land near Beaumont in the south of Western Australia. The last harvest from his fields of various grains and peas was the 23rd of his career, but it has taken him time to recover from the Chinese tariffs.
“We’ve had a reduction in price, but we’ve been lucky to have had two very good years crop-wise,” he said, “so what we’ve lost in price, we’ve gained in tonnage anyway.”
But those boom years (which produced more than 14 million tonnes of barley in the last two harvests) are over.
Additional earnings
As El Niño, the cyclical climate phenomenon responsible for rising global temperatures, returns to the Pacific, ABARES predicts barley production will fall 24 percent to 10.8 million tonnes for the 2023-24 crop.
The reopening of the Chinese market could not have come at a better time, Cole said.
“Much of our barley is graded as feed but is still suitable for brewing in China,” he said, “they use slightly different processes and essentially it means we can get a premium for more of our feed barley.” .
On average, barley destined for China is selling for “around $38 to $40 a ton between now and since the tariffs were lifted,” and that equates to “an additional $400 million worth of the Chinese barley crop.” Australia next year, even with a smaller crop.” “he added.
AFP
China’s appetite for Australian barley is back, three years after tariffs crippled the market