Chinese barley appetite is back

Three years after steep Chinese tariffs halted imports of Australian barley as tensions between the two countries ratcheted higher, the grain is again flowing freely.

Barley is not only used to brew beer but to feed pigs, and China was Australia’s leading market, taking 50 per cent of its barley exports.

China has imported 314,000 tonnes of Australian barley worth $139m since the government scrapped its 80.5 per cent 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 nearly $1bn market evaporate in 2020.

“In the two months following the market’s reopening, Marketing and Trading shipped two vessels of barley to China,” said the CBH Group, a cooperative of more than 3500 Western Australian grain farmers, in its annual report.

Tensions between the countries began to mount in 2018 when Australia excluded the Chinese telecommunications 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 emanated from a close partner of the US.

In response, Beijing slapped high tariffs on key Australian exports, including barley, beef and wine, while halting its coal imports.

A slowdown in China’s economic growth has spurred Beijing to rekindle its relationships with its trading partners.

Meanwhile, Australia sought out and found new markets to offload its harvests – it is the world’s third-largest producer of the grassy grain.

“It caused us to pivot, so we found new markets, like Mexico. We managed to have tariffs lowered, which were previously in excess of 100 per cent,” Sean Cole, the acting general manager of the GrainGrowers trade association, told AFP.

“With China gone, Australia was really forced to go back to more traditional customers in the feed market, mainly the Middle East and Saudi Arabia, where we’ve been for over 20 years,” he added.

Between June 2022 and June 2023, Saudi Arabia became the leading importer of Australian barley, according to data from the Australian Bureau of Agricultural and Resource Economics and Sciences.

As El Nino – the cyclic weather phenomenon responsible for higher global temperatures – returns to the Pacific, ABARES predicts barley production will drop by 24 per cent for the 2023-24 harvest.