China’s commerce ministry is threatening to impose tariffs of around 80% on AUD 1.5 billion (nearly USD 1 bn) of barley imported from Australia as a result of an 18 month anti-dumping and countervailing duties investigation. The investigation followed the inception of a free trade agreement between Australia and China in December 2015 which opened borders for imports on both sides.
Since then complaints about dumping of imported goods from the other partner have not stopped. Big Australian steel producers such as Bluescope and Arrium struggled to compete with cheap Chinese steel. On the other side, Chinese farmers complained about cheap Australian barley imports into the country. Especially the Australian diesel fuel rebate and drought support was a major concern.
"There is no case for dumping, nor case for arguing that barley is being subsidized," says Western Australia's Agriculture Minister Alannah MacTiernan. 80% of all barley exported to China comes currently from Western Australia and some of the farmers there have already stopped sowing barley mid-stream and have turned to wheat in the prospect of losing a major market.
To make things worse, Australia’s Prime Minister Scott Morrison embarrassed China with a call for an independent international investigation into the origins and handling of the Covid-19 outbreak – a move Beijing had claimed was aimed against China.
The new barley tariff would make Australian barley less competitive and processors of barley in China, like national maltsters Supertime and COFCO with a combined annual need of more than 2.2 million tons of malting barley could turn to cheaper imported barley from other origins like France or Canada.
Brewers and maltsters in Europe and Canada are already afraid that the increased demand from China for barley of these origins could have an upward impact on malting barley prices and the respective malt.