China hands Australia a barley bombshell

China hands Australia a barley bombshell

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Australian trade officials have said farmers and exporters may have to look to alternative markets in the absence of Chinese demand.

Australian trade officials have said farmers and exporters may have to look to alternative markets in the absence of Chinese demand.

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Australian trade officials have said farmers and exporters may have to look to alternative markets in the absence of Chinese demand.

Aa

Farmers have been left stunned following China's decision to impose an 80 per cent import tariff on Australian barley. Grain markets plummeted on the news with barley leading the way lower.

The announcement also caught traders by surprise with buyers still paying up for barley, some of which was heading to China, in the days before news of the tariff surfaced. Old season barley plunged $50 to $240 delivered into Melbourne with wheat down $10 at $370 a tonne. New crop barley for delivery in November / December fell by $25 to $230 Geelong and Melbourne.

The Australian government and industry groups have provided extensive submissions to China's Ministry of Commence as part of the investigation and pleaded not to introduce tariffs, but the calls appear to have fallen on deaf ears.

China said the tariff was in response to an anti-dumping investigation by Beijing on Australian barley imports. Most see it as a thinly veiled retaliation by Beijing for Australia's calls for an inquiry into the origins of the COVID-19 pandemic.

China also targeted the Australian beef industry after suspending imports from four large processing plants in Queensland and northern NSW for 'labelling inconsistencies'. Chinese officials have said the barley and beef trade censures are unrelated.

The import tax would decimate Australia's barley trade to China valued at $1.5 billion in 2018. Australian trade officials have said farmers and exporters may have to look to alternative markets in the absence of Chinese demand.

But this won't be easy. China's a country of thirsty people, having accounted for around a fifth of global imports over the past five years, with most of this being used to produce beer.

Industry officials have said exporters are already looking to other destinations including Japan, Saudi Arabia and potentially India.

Cheaper local barley prices are certain to spur on increased domestic feed demand. Falling prices are expected to see a surge in demand from other livestock industries as buyers incorporate more barley in rations at the expense of wheat, which is $50 to $60 more expensive.

Feed barley has been primarily used by the feedlot and dairy industries but other industries, including poultry, are also looking at ways to use more barley.

National cattle on feed numbers for the January to March quarter fell by 12pc, according to the Australian Lot Feeders' Association quarterly survey, following the surge in cattle prices.

ALFA president Bryce Camm said the full extent of COVID-19 isn't reflected in the latest survey and numbers are expected to remain subdued in the coming months.

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