Australian grain farmers have stopped sowing barley mid-stream as they brace for lower prices and the prospect of losing a major market, in a brewing trade storm.

Australian grain farmers have stopped sowing barley mid-stream in some paddocks as they brace for lower prices and the prospect of losing a major market in a brewing trade storm.
Key points:

  • Grain groups say Chinese tariffs could total up to 80 per cent and threaten the viability of the $1.5 billion barley trade into China
  • Some farmers indicate they are switching mid-stream from barley to wheat plantings to avoid such tariffs
  • Others are not worried, believing the feed barley market in eastern Australia will keep prices stable

At the weekend, farmers were told by Australian grain groups that China was proposing to place tariffs on barley imported from Australia as a result of an 18 month anti-dumping and countervailing duties investigation.
The tariffs, which grain groups said could total up to 80 per cent, threaten the viability of the $1.5 billion barley trade into China.
About 88 per cent of Australia’s barley exports to China come from Western Australia, and some growers in that state were now changing their cropping plans mid-way through seeding.
Barley exports to China were worth on average about $1.5 billion.(Supplied: John Kleinig)
Farmers move augers into wheat
Alan Sattler, who farms at Beverley and Kellerberrin in the WA Wheatbelt, has sown most of his barley crop already, said he would switch away from barley and into wheat for some paddocks yet to be sown.
“At Beverley, we had 250 hectares of barley pegged we’ll drop that out and go to wheat,” he said.
“Who knows what’s going to happen, but we’re changing it purely on speculation that the price of barley might drop.”
Mr Sattler said he was optimistic the barley trade into China may be resolved by harvest time, and he believed a feed market for WA barley into the east of Australia would also help keep prices up, but farmers around him were reacting.
“A fella I saw today tweeted if you’re sitting on the front porch this morning, ‘You would have heard 3,950 augers being transferred from barley to wheat,'” he said.
WA agriculture minister Alannah MacTiernan says losing the Chinese barley market would be a blow to WA farmers(ABC News: Kathryn Diss)
Millions at stake in trade tensions
Western Australia’s Agriculture Minister Alannah MacTiernan said the state’s dominant share of the barley trade with China meant its growers were in the “firing line” of tensions between Canberra and Beijing.
Ms MacTiernan said the imposition of tariffs on Australia barley exports to China would cost WA growers “hundreds of millions of dollars a year”.
She argued it was incumbent on Prime Minister Scott Morrison and Trade Minister Simon Birmingham to head off the tariffs, based on China’s concerns about the Australian diesel fuel rebate and drought support.
“To be honest, a couple of months ago we had some thought that we were going to be successful,” Ms MacTiernan said.
“A very, very strong case has been put by the traders and by DFAT [Department of Foreign Affairs and Trade] really answering all of the claims and, I think, pretty clearly establishing that there is no case for dumping, nor case for arguing that barley is being subsidised.”
Asked whether she thought China was threatening tariffs in retaliation for Mr Morrison’s call for an inquiry into the origin and spread of the coronavirus, Ms MacTiernan said: “Everyone is in the same position as I am in terms of ability to judge that.”
“I think it is really important for us to maintain good relationships with all of our trading partners and, of course, WA is very exposed on all fronts,” she said.
Barley has been at the centre of an 18 month investigation by China.(ABC Rural: Karen Hunt)
Grain prices will fall
Grain Trade Australia chief executive Pat O’Shannassy said while the tariffs were not imposed yet, there were big consequences at stake.
“If we do end up with the tariffs that have been indicated, that would effectively halt the export of barley to China as we know it to date,” he said.
“There would be impacts in China as well as in Australia, noting of course that there will be other origins that China will look to [for barley], but there has been a strong relationship particularly around the quality of malt barley in China.”
Mr O’Shannassy said barley prices had been supported by rising domestic demand because of drought, but he expected China’s tariff plans to have the opposite effect.
“There will be continued demand domestically, there will be an impact on barley prices most likely around this and the market will end up determining where that gets to,” he said.
Esperance farmer and WA Farmers grains section president Mic Fels says other markets exist for Australian barley.(Supplied: Mic Fels)
The sky isn’t falling in
WA Farmers grains section president Mic Fels said the move was politically motivated, but China was entitled to do what it was doing, and Australia was entitled to respond.
“The only losers are the beer drinkers and the lot feeders in China and the grain growers of Australia,” he said.
“It’s not a very effective trade tool to be using, I don’t think, if they want to get political outcomes.”
Mr Fels said China was a relatively new market for large-scale barley exports, and other markets existed for the grain.
“The Saudi [feed] market is still there for us and so is Indonesia, and with the new trade agreement there’s a big market there for us [in] Japan, South Korea,” he said.
“We’ve got other markets for barley, they probably don’t pay quite as well as the Chinese.
“[But] we used to grow barley economically selling into those markets so I can’t see why we can’t do it again.
“I don’t think the sky is falling in.
“It’s disappointing and it might affect planting decisions, but if we have to sell into those other markets it’s not like we’ve got nowhere to send the grain.”
‘A kick in the guts’
NSW Farmers Association president James Jackson said he did not think there was a link between the tariff threat and the political stoush about an investigation into the source of COVID-19.
“The Australian agricultural sector is one of the least subsidised in the OECD, so it’s absolute rubbish,” he said.
“It’s a kick in the guts for people planting a barley crop as we speak.
“We don’t dump grain, we can’t afford to, and characterising the fuel subsidies and the non-existent drought package as subsidies it’s not correct.”
The Australian Government and barley exporters have been given ten days to respond to China.