Barley growers consider tariff safeguards

Barley growers consider tariff safeguards

Grains
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SA barley growers are keeping a keen eye on the marketplace after the Chinese government imposed a dumping margin of 73.6 per cent for five years, and a subsidy margin of 6.9pc, on barley imported from Australia.

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WAITING GAME: Kadina cropper Hayden Donnell is cautious about taking drastic action to limit the impact from China's tariff on Australian barley.

WAITING GAME: Kadina cropper Hayden Donnell is cautious about taking drastic action to limit the impact from China's tariff on Australian barley.

SA barley growers are keeping a keen eye on the marketplace after the Chinese government imposed a dumping margin of 73.6 per cent for five years, and a subsidy margin of 6.9pc, on barley imported from Australia.

The tariffs were imposed on the back of Chinese investigations, which alleged dumping - when products are sold at a lower price overseas than in the country where it is produced - by Australian farming companies had caused harm to China's domestic barley market.

With the dispute threatening to cost the Australian grain industry up to $500 million a year, farmers and industry have begun considering options such as other markets, rotational changes and added storage in the event the dispute is not resolved.

Grain market analyst Malcolm Bartholomaeus said there were various ways the tariff dispute could play out.

I think SA and WA will be hit harder (than other states), but the export price will only really go down if China stops using barley. - MALCOLM BARTHOLOMAEUS

He said without China in the marketplace and with other outlets being sought, there may be longer periods where exporters would not be interested in accumulating barley.

"That could mean farmers would not necessarily be able to sell it straight off the header when they normally would so they might be pushed into warehousing or storing on-farm," he said.

Despite these future concerns, Mr Bartholomaeus said most growers would likely wait to see how the market behaved before making any future storage or rotational decisions.

"I think SA and WA will be hit harder (than other states), but the export price will only really go down if China stops using barley," he said.

"If China uses the same amount of barley as they do now all they're doing is buying from somewhere else, and we would then just have to find where the gaps are in other markets.

"I think most growers will opt to wait it out. When the news hit that the tariff might be applied the market fell quite sharply then it rebounded half those losses in a week.

Related reading:Grower concern regarding export reliance on China

"I think the major concern is if China reduces its consumption of feed barley in favour of corn or sorghum, creating a surplus in the global market."

For Minlaton grower Andrew Litster, who farms with brother Chris and their families, the tariff news hit halfway through seeding.

Rotational and agronomic considerations meant the Litsters only dialled back their barley plantings from 950 hectares to 900ha.

"We'd made reasonably-priced forward sales on our barley so we were reasonably happy with what we'd sold, so that was also part of our decision," Mr Litster said.

"While the price drop has been significant, it's where it will hold that's more the worry. If it holds at these levels that'll probably be OK, but if it drops much further it's going to be a worry heading into harvest."

Even at a discounted price, Mr Litster said barley would still have a role in future rotations due to some of the soils they cropped on.

Chris, Deane, Max, Alex, Harry, Andrew and George Litster after reaping their final barley paddock in December.

Chris, Deane, Max, Alex, Harry, Andrew and George Litster after reaping their final barley paddock in December.

Mark Modra, a farmer at Greenpatch on the Lower Eyre Peninsula and head of the SA Barley Advisory Committee, said China's decision would not only hurt Australian growers but Chinese malsters using Australian barley.

"It's difficult for them to change varieties or to a different barley overnight and we've worked closely with them to develop a malting industry using our varieties," he said.

Mr Modra said many in the industry rebuked the notion dumping had occurred.

"We as farmers are price takers," he said.

"We don't get to set the price of our grain. I can't see how we'd be selling under the cost of production as they see it."

It was too late for many EP barley growers to make significant rotation changes once the tariff was announced and Mr Modra said he hoped the government would work with the Chinese to resolve the issue quickly.

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