SYDNEY, Australia – Three years after China imposed steep tariffs on Australian barley, crippling its barley exports, the grain is once again flowing freely between the two countries. China, which previously accounted for 50 percent of Australia’s barley exports, has imported 314,000 tons of Australian barley worth 139 million Australian dollars ($94 million) since the removal of the 80.5 percent tariffs in August. This resumption of trade comes as a welcome relief for Australian farmers who saw a nearly one billion Australian dollar market evaporate in 2020.
The strained relationship between Australia and China began in 2018 when Australia excluded Chinese telecommunications giant Huawei from its 5G network. Tensions heightened in 2020 when Australia called for an international investigation into the origins of Covid-19, an action that China perceived as politically motivated due to Australia’s close partnership with the United States. In response, Beijing imposed high tariffs on key Australian exports such as barley, beef, and wine, while also halting coal imports.
To cope with the loss of the Chinese market, Australia actively sought out new markets for its agricultural products. Mexico became a new destination, with tariffs being lowered to facilitate trade. Additionally, Australia returned to more traditional customers in the Middle East and Saudi Arabia, where it has maintained relationships for over two decades.
Saudi Arabia emerged as the leading importer of Australian barley between June 2022 and June 2023. This shift in market dynamics has provided some stability for Australian farmers, allowing them to navigate the loss of the Chinese market. However, challenges lie ahead as the cyclical weather phenomenon El Niño is predicted to return to the Pacific, resulting in a projected 24 percent drop in barley production for the 2023-24 harvest.
The reopening of the Chinese market for Australian barley couldn’t have come at a better time. Sean Cole, the acting general manager of the GrainGrowers trade association, explained that even though much of the barley is classified as feed, it is still suitable for beer production in China. This means Australian farmers can fetch a premium price for their barley, leading to an estimated extra 400 million dollars in value for the Australian barley crop next year, despite the anticipated smaller harvest.
The revival of the Chinese market is not only a boon for Australian barley farmers but also reflects China’s efforts to rekindle its relationships with its trading partners amid a slowdown in economic growth. While it remains uncertain how long this renewed trade will last, Australian farmers are optimistic about the opportunities it presents.
As the Australian barley industry looks to the future, it must navigate not only changing market dynamics but also the challenges posed by climate patterns like El Niño. Balancing domestic production with export opportunities will be crucial for maintaining the profitability of this important agricultural sector.
In conclusion, the resumption of Chinese demand for Australian barley provides a much-needed boost to Australian farmers who faced significant challenges in recent years. It also underscores the importance of adapting to shifting markets and finding new opportunities. With the revival of trade, Australian barley farmers can once again find stability, even in the face of uncertainties caused by factors such as weather patterns.
