Barley trade war

By Charlotte Wooldridge | posted on May 21, 2020

GREAT Southern farmers have found themselves bearing the brunt of an international trade feud this week amidst growing tensions between the Chinese and Australian governments.

China introduced punitive tariffs of more than 80 per cent on barley imports from Australia which many see as a response to Australia’s lead on amassing 110 countries to push for an international coronavirus inquiry.

With around 40 per cent of Albany Port’s one million tonnes of barley exports being sent to China per year, Great Southern farmers are concerned that their livelihoods will be the ones at risk.

Kojonup barley farmer Lachie Thorns said that he’s concerned about what the future looks like with the industry taking such a huge blow.

“It’s a real worry when we’ve got all our eggs in one basket and dealing with one country and they go play funny buggers a bit,” Mr Thorns said.

“Most of the state’s barley is in, what does that mean for our pricing now and budgeting and all that sort of guff?

“What other markets can CBH and the rest of the grain market find?

“Time will tell I suppose, until we start seeing some pricing over the next couple of weeks and until that happens, we’re a bit in the dark really.

“We’ll see how big an impact it really has.”

Although not all the Great Southern’s farmers share the same concerns, with Glendavale Farms Stuart Hocking stating that he thinks the concerns have taken on a life of their own.

“I kind of thought everyone overreacted a bit,” Mr Hocking said.

“We pretty much had all our barley in the ground when the news had come out, so we haven’t changed anything we’re doing.”

Mr Hocking had faith that the industry would pull through, by diverting the grain to other markets such as Thailand, and even has suspicions that China will be back.

“China’s just making a threat, I kind of think if they still want barley it will blow over and I they’ll come back,” he said.

“When it comes time to them wanting barley, they might come back for ours.”

Southern Ports CEO Steve Lewis said while he expects there to be some impact on the Ports’ profitability from the tariffs, he then backed Aussie farmers to find the way through.

“It is too early to express concern,” Mr Lewis said.

“WA farmers are very resilient and we understand that many have already planted, or plan to plant wheat or canola, rather than barley, and the industry will seek other markets for its barley stock.

“At this stage the Port will work with its customers and continue to monitor the position.”

WA Minister for Regional Development, Agriculture and Food Alannah MacTiernan said that the new tariffs were disappointing and would see massive changes throughout the industry.

“While we have every confidence that Australian barley is neither being dumped nor subsidised, this final outcome is not surprising, given the Chinese Ministry of Commerce’s conditional ruling less than two weeks ago,” she said.

“It would appear Western Australian barley growers have been caught up in a much larger issue.

“This decision could see a direct loss of up to $200 million to Western Australian farm incomes this year from reduced barley values and reduced wheat prices, as more farmers turn to wheat crops.”

However, Federal Agriculture Minister David Littleproud disagreed that the tariffs were a result of Australia’s calls for an investigation into China.

“The reality is they are separate,” he said.

“These are issues in which the Chinese officials in fact raised on barley 18 months ago.

“So this wild speculation is dangerous.”

Mr Littleproud did echo his disappointment however that Australian farmers were being unjustly punished, and confirmed Australia would be contesting China’s move with the World Trade Organisation.

“China’s decision … to impose a tariff on our barley producers, to say that I’m disappointed is an understatement,” he said.

“This is something that we will strongly reject, the premise that the Australian barley farmer is subsidised in any way, shape or form.

“We will continue to prosecute that case.”

But it’s not only Australian farmers who will suffer due to the tariffs.

Chinese brewing companies have also expressed concern as much of the high-quality barley imported from Australia is used to make their beers.

Assistant Trade Minister Andrew Gee said that a positive trade relationship between the two countries only benefits them both.

“Trade is a two-way street and there are benefits to both countries and so the benefit to China is, by having our barley, is that it helps brew great quality beer,” Mr Gee said.

“And so potentially messing with the recipe of the world-famous Tsingtao – that may not be such a great result for Chinese beer lovers, or beer lovers anywhere in the world.

“You mess with an Australian beer recipe, I know you’re going to be in trouble over here.

“So, look, I think it’s mutually beneficial and I think we’ve just got to calmly work through these issues in good faith and I think that’s what we’re going to do.”

The industry body representing China’s beer giants such as Tsingtao and the China Alcoholic Drinks Association has warned the threatened tariff increases on Australian barley would hurt the sector at a time when it is struggling to recover sales following the coronavirus outbreak.

Despite the unpredictability of the situation, Kojonup farmer Lachie Thorns said as long as his favourite ales aren’t affected, he’ll find a way to get through.

“As long as our beer keeps coming, that’s the main thing,” he said.