Industry works through tariff challenges

Industry works through tariff challenges

CBH chief marketing and trading officer Jason Craig said a working group was looking at alternative markets for Australian barley.

CBH chief marketing and trading officer Jason Craig said a working group was looking at alternative markets for Australian barley.


"It's a long process through the Chinese court system, it's likely to be quite costly & the burden on the Australian industry is too much."


A NATIONAL industry working group is collaborating with the Federal government to process potential options for fighting the tariffs imposed on Australian exports of barley by China.

The tariffs which were formally announced on May 18 came after 18 months worth of investigations by the Ministry of Commerce of the People's Republic of China (MOFCOM) into both countervailing and anti-dumping.

The industry working group is made up of representatives from Grain Trade Australia, Australian Grain Exporters Council, Grains Industry Market Access Forum, Barley Australia, GrainGrowers Limited, Grain Producers Australia and CBH Group.

Speaking at the Grain Industry Association of Western Australia's (GIWA) 2020 Barley Forum on Monday, CBH chief marketing and trading officer Jason Craig said it was estimated the impact of the tariffs on the industry would be worth more than $500 million in the long-term.

"The working group has two things it's looking at - the first being working with the Australian Export Grains Innovation Centre (AEGIC) on developing alternative markets as it's clear that with the duties in place we have to look at other markets," Mr Craig said.

"We're also working with the Australian Government on the four of five options that we can look at to fight the tariffs, however those options are not mutually exclusive.

"We can approach every option, but we have to think about the success rate and which options have the best chance of providing results for us going forward."

The first option is focused on approaching the Chinese government through diplomatic channels, something which the Australian Government has been doing.

While that has been made more difficult due to COVID-19, there have been some discussions at higher levels and work is being done to lobby on behalf of Australian growers.

Mr Craig said the second option was to appeal the decision in the Chinese court system.

"The Industry Working Group does not believe this is an option which will provide the best chance of reducing the tariffs, so we're not pursuing it," he said.

"It's a long process through the Chinese court system, it's likely to be quite costly and the burden on the Australian industry is too much."

Another option is to appeal the decision under the MOFCOM administrative process, which is something the industry group is currently working through in order to provide a submission on both the countervailing and anti-dumping claims.

"We also looked into appealing the decision under the China-Australia Free Trade Agreement, but that is an option we probably will not pursue as it is very similar to and based on the World Trade Organisation (WTO) appeal process," Mr Craig said.

"Based on that, it's a wiser option to move to the next stage which would be the WTO appeal process which is led primarily by the Australian Government.

"The thing about that process is that it could take up to three years and even to get a submission in can take up to 12 months."

While the industry working group is looking at ways to fight the tariffs, more work is being done to find alternative sources for Australia's malt barley.

However finding alternative destinations will be difficult as China has a malting capacity of 5.3 million tonnes, putting the country incredibly far in front of any other market place in the region.

Also speaking at the GIWA Barley Forum, CBH barley trading manager Drew Robertson said for Australian malting barley exports, China had been the biggest market at 90pc for a few years.

"That campaign has been somewhat curtailed this year, but they're still 83pc of our export market, but the volume is significantly lower than what it has been in recent years," Mr Robertson said.

"There is not the malting capacity within regions nearby that will be able to absorb the amount of malt barley that Australia traditionally has supplied to China.

"Plus, we've been developing China as a market over the past 30 or 40 years, so when you think about moving into new markets, that's going to take a long period of time."

From a malting barley perspective, Japan, Vietnam and South Korea will initially be the markets WA will be trying to work into while new destinations are developed.

In terms of those new markets, India is a great possibility but there are still a few issues with market access.

The important tolerance of glyphosate and imazapyr in India is 0.01, which is basically a default maximum residue limit, and it's something which everyone needs to be vigilant about and aware of if access to that market is to be established.

According to Mr Robertson, the trend of increasing barley production in WA will likely start to reduce and from 2021 the percentage of barley will decline.

"GIWA is forecasting a 17 per cent decline in barley hectares year on year, going from 1.95 million hectares in 2019, down to 1.62mh in 2020," he said.

"As a result of the low malting barley premium, which is currently about $5 per tonne over feed barley, we'll likely see less focus on achieving malting grade and an increased focus on overall production to compensate for the increased price spread.

"If growers are going to continue growing barley, they may just push for total gross production in order to compensate for price and we may also see an increase in planting of high yield varieties."

The story Industry works through tariff challenges first appeared on Farm Weekly.


From the front page

Sponsored by