Farmers who fell victim to the multi-billion-dollar China-Australia trade spat are seeing signs for optimism as they find new customers for their produce.
Key points:
- Farmers caught out in Australia’s trade dispute with China are finding new markets for their produce
- The cost of tariffs and the unofficial trade bans is unclear
- Cotton, barley diversify, lobster exporters still face an uncertain future
Barley growers say they are getting good prices from markets in the Middle East and Asia, while wool, wheat and dairy are largely unaffected by the trade bans and, despite impacts on some abattoirs, red meat sales to China remain high.
Cotton growers are also making some inroads in markets including Indonesia, Thailand, Vietnam and Bangladesh and the wine industry has been active in finding new markets.
But the lobster industry has struggled to fill the gap caused by the loss of the China market.
Caution with comments on China
The Department of Agriculture will not say what the cost to farmers has been of higher tariffs and unofficial customs bans across a range of commodities, including barley, beef, wine and cotton.
“China has not imposed sanctions on Australian agriculture, fisheries and forestry products,” a spokesman said.
It is also careful about how it refers to the row:
“Australian agricultural, fisheries and forestry exports faced a number of challenges, including drought, bushfires, COVID-19 and disruptions to regular trade flows for some commodities into the China market.”
The National Farmers’ Federation has speculated farmers could lose more than $35 billion over the next decade because of the trade fallout, although it is unclear how the lobby group arrived at the figure.
Signs of recovery for barley exports
Eight months after China introduced hefty tariffs on barley, Australia’s largest grain handler, CBH Group, says growers are being paid similar prices to when its most valuable customer was buying.
“For the Australian barley industry, yes it has been a tough 2020, but we’re certainly recovering here and prices have recovered to basically the same levels as pre the anti-dumping tariffs,” CBH Group chief marketing and trading officer Jason Craig said.
Mr Craig estimated a bumper 13 million tonnes of barley had been harvested across Australia this summer.
He said strong demand from feed markets in the Middle East and Asia and an Australian-first trial to sell premium malting barley to brewers in Mexico had helped to replace lost trade to China.
“Currently it’s one shipment of 35,000 tonnes that’s worth more than $10 million, so it’s an important trial,” he said.
Red meat still selling into China
Australia continues to sell a lot of farm produce into China.
Exports including, wool, wheat and dairy are so far largely unaffected by the trade spat and, despite some abattoirs being restricted, sales of red meat to China remain high.
In 2020, six Australian abattoirs were suspended from the trade over labelling issues and claims of meat contamination.
A further two meat plants in Victoria are also waiting to resume selling beef and lamb to China after staff were infected with COVID-19, but prices for Australian cattle are at record highs.
Australia’s recovery from drought has seen the price of cattle soar to record levels, and Mr Strong said, “finding a home for beef not going to China isn’t a major challenge”.
China was Australia’s third most valuable market for red meat last year.
“We sent them 197,000 tonnes of beef, so that was the second biggest year by quite a bit that we’ve sent to China and they were only number three by about 25,000 tonnes less than the US,” Mr Strong said.
Cotton spreads risk, returns still high
Cotton growers are also expected to receive high returns for their produce in 2021, as the industry expands into markets across Indonesia, Thailand, Vietnam, and Bangladesh.
Australian growers and shippers claim Chinese spinning mills were told last October to stop buying Australian grown cotton, and the billion-dollar a year trade essentially stopped.
Toowoomba-based cotton trader and industry analyst Pete Johnson estimated growers would lose a $10-$20 a bale premium without China in the market, but that returns to growers this year were expected to be “historically high”.
“Would we prefer the Chinese were there to take our cotton? Absolutely, but [we are] spreading our risk into a range of other markets throughout the subcontinent and Asia,” Mr Johnson said.
“Spreading that risk is ultimately not a bad thing for the industry.
Winemakers look to new markets
In the two months since China introduced tariffs on Australian wine, the value of exports fell by $250 million when compared to the same time last year.
The loss of such a lucrative market is disappointing for New South Wales winemaker Bruce Tyrrell, who spent much of last year looking for new customers.
“They’re not going to be massive, but they’re good markets — wealthy countries building their level of sophistication, so as that happens, wine drinking goes with it,” he said.
The Australian wine industry will also look to other Asian countries, into parts of Africa and the US.
Mr Tyrrell said 60 per cent of Australian wine is exported, and while it might be nice to think the domestic market could absorb some of the loss, it was unlikely.
Path to recovery not clear for lobster industry
For the Australian seafood industry, which sent almost 95 per cent of rock lobster exports to China, the market is harder to replace.
Louise Hart, who owns a family fishing business on Tasmania’s West Coast, says she’s been operating at a loss since China stopped buying up last November.
“We’re not pinning our hopes on China coming back at all — no,” Ms Hart said.
Ms Hart is uncertain about her industry’s future when the new year quote begins next month.
“We don’t know if we go out fishing. Are the buyers going to be able to sell them at any price at all, or are they just going to sit in their freezers or their tanks. We really don’t know,” Ms Hart said.
Government looks to EU, UK
Trade Minister Dan Tehan said he hoped new trade agreements with the UK and EU, expected to be established this year, would help exporters no longer trading into China.
“What those free trade agreements will do is provide us with access to another 500 million consumers at cheaper rates for our exporters,” Mr Tehan said.
Watch this story on ABC TV’s Landline at 12:30pm on Sunday, or on iview.
