China's subsidy claim hard to comprehend

China's subsidy claim hard to comprehend

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China's ruling that Australian barley growers were subsidised by the government - allowing them to dump grain into China - is hard to understand.

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CHINA's decision to impose massive tariffs on Australian barley has sent shockwaves through the sector, with claims the move could cost rural economies upwards of half a billion dollars a year.

There's been a lot of speculation about whether the decision has been made in retaliation to Australia's vocal push for an investigation into the origins of the coronavirus outbreak. We'll probably never know for sure whether we would've seen the same outcome were the world not in the grips of a global pandemic.

Many outside the ag sector wouldn't realise China's anti-dumping investigation has been hanging over the sector's head for 18 months. I've seen lots of comments about us just being able to find 'other markets' for our barley - but we know it's not that simple.

Sure, Australian barley is highly regarded for its quality, but buyers keen to take a few extra million tonnes of grain at a price above our cost of production don't grow on trees.

Related reading:China barley tariffs leave 3.4m tonne export gap

Of course this has to happen in a year when widespread opening rain means barley production could rise, just as the domestic demand for feed barley fuelled by the drought begins to dry up.

It's pleasing to see that there is an appeals process, but concerning to hear this may be far from a quick process.

Federal Agriculture Minister David Littleproud has been vocal in criticising China's decision, but has also emphasised this is not the start of a trade war.

There's a lot at stake should our relationship with China sour further. So far barley is bearing the brunt of this, with beef also being targeted for unknown reasons. The last thing we want is for our wool, sheepmeat or wine exports to also be in the firing line.

Related reading: Massive corn crop an equal threat to barley values

There's one detail of China's decision I just can't get my head around. The notion that Australian farmers have been subsidised by the government - through the Farm Household Allowance or efficiency programs in the Murray-Darling Basin - allowing them to dump barley into the Chinese market.

There are many, many countries where farmers benefit heavily from government subsidies. Australia is not one of them.

That programs associated with the Murray-Darling Basin - a long way from our prime dryland barley-growing areas like the Yorke Peninsula - have been singled out as a subsidy helping graingrowers would almost be bordering on the unbelievable, were the issue not so serious.

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