Small FTA gains for sorghum, barley

18 Nov, 2014 07:27 AM
Every little bit helps in getting into these markets

SORGHUM and barley industry organisations saw small gains for producers in the Australia-China free trade agreement (FTA), announced yesterday.

The sorghum sector welcomed the removal of the two per cent tariff on sorghum exports to China.

While saying it would not revolutionise the Australian sorghum industry, Wayne Newton, president of the grains section of Queensland's AgForce, in the nation’s largest sorghum producing state, said it would be an advantage.

“Every little bit helps in getting into these markets.”

“Certainly the demand in China for Aussie sorghum has been very strong in recent years and anything we can do to remain competitive will be good.”

China emerged as a key buyer of Australian sorghum in 2013, buying up large tonnages for the use in making baijiu, a traditional sorghum-based spirit.

Grain Growers Limited (GGL) estimated the total value of sorghum exports to China in 2013 to be $91 million.

Andrew Jurgs, regional trading manager, Philp Brodie Grain, Toowoomba, said with the present high regional basis due to strong demand from the local feeder industry as a result of the current drought meant China was not expected to be a big player this year, but said the cut in tariffs would play a small but crucial role in improving competitiveness.

“Anything that allows us to become even a little more competitive against other origins, principally the US, will be a good thing.”

This season is expected to be below average once again in terms of production and domestic demand is likely to account for most of the crop, but Mr Newton said China could develop into an important market for Australia should Aussie production return to more normal levels.

“They have been in the market before and they apparently like the quality of our grain, and this reduction in tariffs will allow us to be just that little bit more competitive.”

Barley boon in FTA

Barley will be another winner in the China free trade agreement, with a three per cent tariff dropped immediately.

Ian Longson, business development manager with the Grains Industry Association of Western Australia (GIWA) said Australia’s developed malt barley market with China would be the key beneficiary.

“We already have the market over there, so it will mean there will be benefits virtually straight away without any time setting up the market.”

Mr Longson said every little advantage would count in winning market share in China, which accounts for up to four million tonnes of malt barley imports each year, but is also particularly price sensitive.

“It will give Australia another edge to compete against lower priced competition, out of the Black Sea region in particular.”

He said Australia already had a significant portion of the growing Chinese malt barley market and said the FTA would ensure Australian barley remained price competitive to the world’s most populous nation.

Mr Longson did not think the FTA would spark off much in the way of exports of feed barley to China.

“While there is a little bit of work there using feed barley in livestock enterprises, the preferred feedstocks are still by far corn and soymeal.”

Grain Growers Limited (GGL) valued Australian barley exports to China in 2013 at $351 million.

Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media


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