Miling farmer Tony White is bracing for a $100,000 hit after China’s barley tariff caused prices to plummet.
Mr White is one of thousands of WA grain farmers hit by the fallout from escalating trade tensions between Beijing and Canberra.
Australia’s exports of barley to China — worth $950 million last year — will virtually stop dead after Chinese authorities confirmed on Monday night they would impose a crippling 80.5 per cent import duty.
It comes after an 18-month dumping investigation.
Until now, China has been Australia’s biggest customer for the grain, used to make malt in beer and for stockfeed.
Mr White and his brother Paul had just finished seeding 700ha of barley as part of their 3400ha program when it was revealed two weeks ago China was weighing up a tariff. Prices plunged almost 20 per cent, or $50 per tonne, when the tariff was floated, although it has regained some ground since.
Australia’s exports of barley to China — worth $950 million last year — will virtually stop dead after Chinese authorities confirmed on Monday night they would impose crippling 80.5 per cent import duties, after an 18month dumping investigation.
Until now, China has been Australia’s biggest customer for the grain, which is used to make malt in beer and for stockfeed.
China imported 2.3m tonnes of Australian barley in 2019, worth more than $950m.
The tariffs, paid by customers buying Australian barley, artificially inflate the price, rendering it uncompetitive against other suppliers.
While Australia will look to other markets with the biggest buyer of Australian barley now out of the equation, prices have fallen, which will hurt farmers’ returns and have knock-on effects throughout communities.
The weaker prices are expected to cost WA’s 3000 or so barley growers about $200m in reduced income, while nationwide the cost to growers is estimated at $500m, according to Co-Operative Bulk Handling.
CBH marketing and trading general manager Jason Craig said before China’s threat to impose tariffs two weekends ago, the average barley price being paid to farmers was about $270 a tonne.
The price dived by more than $50 a tonne (18.5 per cent) overnight after China made the initial announcement 10 days ago, and has since edged back to about $240 a tonne (11 per cent down from before the announcement).
Other potential buyers for Australian feed barley include Saudi Arabia, Thailand and the United Arab Emirates, while the main alternative markets for malting barley are Vietnam and Japan.
Mr Craig said malting barley would be most affected by the loss of China as a market, because the combined alternative markets including Vietnam, Japan, India, Africa and South America, only accounted for 60 per cent of the total capacity of China.
Although WA farmers have in recent years grown more than 75 per cent of the State’s barley exports to China, other States were expected to provide a bigger portion in 2020 after drought-breaking rains in many areas put them on
track for reasonable crops and higher production this year.
The move to impose tariffs coincided with a fall in China’s demand for malt, with beer consumption down by 30-40 per cent as a result of the COVID-19 pandemic, Mr Craig said.
Chinese demand for feed barley is also down because African swine fever has wiped out about half of China’s pig herd.
“The whole industry is very disappointed by this decision. We also feel very much for our customers, some of whom we have worked with for more than 40 years and who are very strong supporters of WA growers,” Mr Craig said.
WAFarmers president Rhys Turton said the tariff would cost millions and force many growers to change their crops and dump barley.
He labelled China’s claims Australian farmers were heavily subsidised and were dumping barley “an absolute joke”, saying subsidies to Australian growers were the lowest in the world, addingthat the dumping claims had not been substantiated.
While WA Agriculture and Food Minister Alannah MacTiernan has estimated grower incomes would be slashed by up to $200m this year, Mr Turton said he believed it would be “significantly more”.
Mr Turton, who farms mixed grains, hay and sheep in the Wheatbelt, said growers who had not yet sowed would plant substitute crops, with many choosing wheat. He plans to reduce his barley output, which usually comprises 30 per cent of his crop.
While China’s brewers and maltsters preferred Australian barley, Mr Turton said they would not pay the much higher prices caused by the tariff and would instead turn to supplies from Europe and North America.
Mr Turton strongly encouraged the Federal Government to appeal to the World Trade Organisation, an option Trade Minister Simon Birmingham is keeping open.
“The industry would certainly support the Government in its efforts,” the farmer said. Beijing announced the tariffs on Monday, confirming the industry's worst fears over an investigation that began in 2018 into allegations Australia “dumped” barley too cheaply into China, hurting domestic production.
The slug comprises a 73.6 per cent “dumping” tax and a 6.9 per cent tariff on supposed Australian Government subsidies.
China claims the Murray-Darling Basin Plan and drought assistance amount to subsidies — claims Senator Birmingham has labelled “completely ridiculous”.
“The Commonwealth has stressed the trade dispute is a separate issue to Australia being among the first nations to call for answers from China about the origin of COVID-19 but those in the industry could join the dots”, Mr Turton said.
WA Premier Mark McGowan has offered to help smooth tensions but the Federal Government has so far not accepted his offer.
WA Asian Engagement Minister Peter Tinley urged caution.
“You can still stand up for what you believe in but the way you do it, you conduct yourself in the international sphere, is very, very important,” Mr Tinley said.
Mr Turton said the industry was “bracing” itself, awaiting negotiations.
China is Australia's largest barley export market, while Australia is its biggest supplier, with WA the major producer.
We also feel very much for our customers . . . who are supporters of WA growers.
Tony White and son Xavier, 7.
CBH’s Jason Craig.
York farmer Rhys Turton.