Buoyed by China’s tariffs, Australian growers embrace new markets | Agriculture

Sydney, Australia – Brett Hosking, a grain farmer in Victoria, Australia, has cut his profits significantly since China imposed an 80.5 percent tariff on Australian malt barley in 2020.

Now barley growers estimate they are losing $50 Australian dollars ($35) per tonne, he said, as they have to sell their quality malted barley to other markets as animal feed.

But not only barley growers are under pressure. Other Australian industries, including timber, barley, sugar, lobster and wine, have suffered from China’s trade restrictions introduced since 2020.

Farmers in these industries are hopeful that tensions between China and Australia will ease under the new Labor Party government, elected in May, after relations hit new lows when Prime Minister Scott Morrison called for an international investigation into the origins. of COVID-19.

After meeting her Chinese counterpart Wang Yi last month, Australian Foreign Minister Penny Wong described their talks as the “first step towards stabilizing the relationship”. Australian Prime Minister Anthony Albanese has said Australia will “cooperate with China where we can” but “will not respond to demands”.

But after more than two years of strained ties, some are poised to go all the way, seeking diversification or exiting while they still can.

Many barley growers are exploring alternative crops or increasing their production of other grains, Hosking said, although most have not completely switched crops due to the need to consider the long-term sustainability of their farms and market changes.

“Maybe a little more canola, a little more lentils, even a little more…wheat in boxes,” he told Al Jazeera.

China is Australia’s largest trading partner, accounting for nearly a third of the country’s international trade. While the Australian economy has generally held up well thanks to trade diversification and strong exports of commodities like iron ore, trade restrictions hit industries like barley hard.

“It’s probably one of the major market challenges we’ve faced,” said Hosking, who is also chairman of GrainGrowers, the national voice for Australian grain farmers.

China is “still a very important market” for grain in general, he said, and farmers typically grow a range of grains, but “there is no other market in the world that demands malting barley at the same level as China.”

A similar push to diversify is playing out in the wine sector, which is plagued by Chinese anti-dumping duties of up to nearly 220 percent.

Shares of the world’s largest publicly traded winemaker, Australia’s Treasury Wine Estates Ltd, plummeted after the imposition of tariffs, as hundreds of sea containers of wine piled up in ports in China.

Jeremy Cassio
Jeremy Cass, CEO of Riverina Winegrape Growers, lobbies for government support for farmers transitioning to new crops [Courtesy of Jeremy Cass]

In New South Wales, Riverina Winegrape Growers, which represents 275 wine grape growers, is lobbying the state and federal government to support growers who want to switch to new crops.

“It’s just having that financial reserve to switch to a different type of perennial crop and even just the cost of removing vineyards is pretty high,” CEO Jeremy Cass told Al Jazeera, suggesting the government grant subsidies or loans with could use a low interest rate.

For grape growers, the decline in Chinese demand has been exacerbated by a perfect storm of complications, including the pandemic and supply chain disruptions.

In terms of logistics, it has been a struggle to access ships, containers and even trucks, Cass said.

“We’ve lost two or three trucking companies in our local area in the last 12 months to two years,” he said, describing how the truck driver population is aging and not being replaced by younger generations drawn to white-collar workers.

While the Riverina initially avoided the worst effects of the recession, forcing some growers to leave their crops on the vine, Cass doesn’t expect the region to be so lucky this year.

“We expect to see grapes on the vine this year,” he said.

Another NSW grape grower, Frank, who asked to be called by his first name, said the wineries he sells should put a limit on what their growers produce.

“They only let you grow a certain amount of tons per hectare,” he told Al Jazeera. “…So it’s going to be less of a return and because the prices are so low as well, it basically means we’re making a loss.”

But the wineries he works with have been good to their growers, he said. Other wineries have had to abandon some vineyards altogether.

According to Bruno Altin, a Riverina farmer, many wine grape growers have turned to an afterthought to keep their heads above water. He believes that growers should also look for new markets for grapes in addition to wine.

“There are so many different cultures that don’t drink… So to access those markets with a different product would be a game changer,” Altin said.

Australian wine
Australian wine grape growers hit hard by Chinese trade restrictions [File: James Bugg/Bloomberg] (Bloomberg)

It’s a sentiment echoing in other hit industries, such as barley, which are coming to grips with the drying up of the Chinese market.

While the “ultimate goal” would be to remove Chinese tariffs on Australian barley, Hosking said, current tensions present “a real opportunity” for the government to invest in market development.

“We’ve seen that a little bit,” Hosking said. “We sent our first shipments of Australian malt barley to… the Heineken group in Mexico.”

“So in a way,” he added, “China has done us a favor by letting us look a little further into new opportunities as an industry and I think there are probably more opportunities like that.”

Cass said the challenges Australian farmers face go beyond tensions with China and that the government must recognize that there are “issues throughout the supply chain that need to be addressed”.

“We can grow as little fruit as possible, but if we can’t get it to our customers in the end in the form of wine from the wineries, then that’s a problem,” he said.

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