Australia Australian Barley farmers forced to sell grain elsewhere as China imposes new trade tariffs
Australia has become reliant on a country ‘who’s shown us that they are an enemy’
Leader of Katter’s Australia Party Robbie Katter says until Australia can “learn to cut China out of the equation” in most respects, we will “always have a weak bargaining position”. China has given the nation’s barley producers ten days before potentially imposing close to an 80 per cent tax on its barley imports.This comes as an ongoing committee into the need for diversification in Australia’s trade relationships is preparing to call on the Chinese Ambassador to Australia to give testimony.Mr Katter described the current jostling between the Australian and Chinese governments as “certainly a game of brinkmanship”.
Barley farmers like Mic Fels are bracing for a major financial hit as China's new trade tariffs effectively kill off their premium market and force them to try and sell their grain to less lucrative and more competitive global markets.
"It's a hugely disappointing outcome and we had hoped for something less damaging for the industry," said Mr Fels, from Esperance, on Western Australia's south coast.
In anticipation of China's announcement of an 80 per cent tariff on Australian barley imports,in their fields knowing their largest export market was in jeopardy.
Australian beef processors 'delisted' in China trade escalation
Australia's livestock farmers could be the latest victims in a fast-evolving trade war, with China with Australian abattoirs banned from selling meat to the Asian giant.Major Australian abattoirs have been banned from selling red meat into China, just days after it announced plans to introduce an 80 per cent tariff on Australian barley — bringing the trade to its knees.
Australia's barley exports to China were worth $600 million in 2019,.
Western Australian farmers will feel the brunt of the tariffs; about 88 per cent of barley exports to China come from WA.
Mr Fels knows the tariffs have now priced him and other farmers out of the Chinese market, which had been prepared to pay a premium for high-quality Australian malted and feedlot barley.
"A pretty big hit to our profit margin this year on barley," he said.
"It may even wipe the profit margin away depending how bad it gets."
Mr Fels, who is also the WAFarmers grains president, said it could put a lot of farmers into the red this season.
"People have made their planting decisions now," he said.
Aussie's fear for their jobs as China blocks meat exports to largest abattoirs
China has fuelled escalating trade tensions with Australia blocking meat exports from four of the country's largest abattoirs.Eighteen per cent of Australia's beef production is exported to China, with exports worth more than $3 billion a year.
"Most of the barley in the State has been planted, literally in the last two to three weeks. You can't pull it out of the ground now it's in. We're sort of committed on barley.
"But most farmers have resilient enough businesses that you can absorb that once, but it will mean that they change out of barley the following year so it doesn't happen again."
Further west in the township of Amelup, near the Stirling Range National Park, Tim O'Meehan had sowed about half his barley last week and then stopped as tensions with China escalated.
"I won't seed 90 hectares, and there's probably another 150 that I'm contemplating whether it goes into wheat or barley," he said.
The price of barley fell sharply as news of proposed tariffs emerged and Mr O'Meehan is already resigned to making less money this year.
"You just sell it somewhere else, you take a hit with the money," he said.
"Fill the void that way. But there's no guarantee there. China's been a huge buyer of our barley."
Premier calls for speedy resolution to China beef export ban
Annastacia Palaszczuk warned any "trade war" could cripple Queensland's beef export economy and put thousands of jobs in jeopardy.On Tuesday federal Trade Minister Simon Birmingham said the department had been notified late on Monday that four abattoirs had been suspended by China over "issues related to labelling and health certificate requirements".
Diversifying markets to lessen reliance
Farmers are looking to diversify away from China to other markets or to expand existing markets, even if it means accepting lower prices and fighting it out in more competitive markets.
Mr Fels said Saudi Arabia had been the major buyer of Australian feedlot barley for cattle eight-to-ten years ago, but China had since started buying it at a higher price.
He said Australian farmers would now be competing with growers from around the Black Sea region for access to the Saudi market.
"Even though we have our premium quality product, if the premium buyer exits the market vis-a-vis a tariff, then we're sort of competing with low grade, low-quality grain from other parts of the world and getting priced accordingly," he said.
Australia exports about 730,000 tonnes of malted barley each year, mainly to countries in Asia for brewing beer.
Mr Fels said increasing exports to existing buyers in South Korea, Japan and Vietnam was an option.
With a free trade deal due to come into force with Indonesia in July, he said that would include a deal to export 500,000 to 1 million tonnes of feedlot barley.
China denies Australian minister's request to talk about barley amid coronavirus investigation tension
The Federal Agriculture Minister confirms he's been unable to speak with his Chinese counterpart on the eve of an expected tariff being formally imposed on Australian barley. David Littleproud is the second minister in successive days to admit to being unable to talk to high-ranking Chinese government officials as trade tensions between the two nations continue to fester.It comes as China is tomorrow expected to announce an 80 per cent import tariff on Australian barley, having accused exporters of dumping their crop in that country's market.
"We do have other buyers for our grain, we're not going to be cast out into the street, that's for sure," Mr Fels said.
Concerns of more tariffs in other sectors
The tariffs have farmers and other producers worried the trade dispute could expand to other sectors.
Amelup farmer Tim O'Meehan, who also relies on sheep for about a third of his business, thought it may already have started, with wool prices falling in the last six weeks.
Most of WA's wool is processed in China.
"We're sadly so reliant on China at the moment, barley, wool, beef, its a big worry," he said.
China's ambassador to Australia Cheng Jingye has already.
About a quarter of all wine made in Australia is exported to China, creating a market worth of about $1 billion a year.
"There's no question it would require a big pivot and be something that probably would be best not have to happen," Larry Jorgensen, chief executive of Wines of Western Australia, said at the prospect of a boycott or tariffs.
Even though WA wine growers are not as exposed to the Chinese market as their eastern states counterparts, they have also been looking to diversify their markets.
"That's the pivot really, is how you change your allocation of resources that could grow again. The UK for instance, the dynamics there and the impact that Brexit has had," Mr Jorgensen said.
He said the industry also had its sights set on growing exports to South Korea, Japan and the South East Asian markets as well.
Australia won't be swayed by China threats, Dutton says .
Home Affairs minister Peter Dutton says Australia will not be intimidated by China's tariff threats amid reports coal exporters could face tougher selling restrictions. New inspection regulations for iron ore imports in China and a decision to slap 80 per cent tariffs on Australian barley imports has already seen the trade war with Beijing escalate.Some beef exports from Australian farms have also been banned."We have beliefs and values - and we're going to stand by those," Mr Dutton told Today."We don't believe there is a reasonable case in relation to the taxes, tariffs imposed by China.