WIMMERA farmers will have to make big decisions about growing barley from next year, if the trade war between the US and China continues.
Grain Producers Australia chairman Andrew Weidemann, of Rupanyup, says Australia has had an "unhealthy reliance" on China when it comes to barley exports.
For the past two years the US and China have been imposing tariffs on billions of dollars worth of each other's goods.
Mr Weidemann said confidence in the global barley market was indirectly put under pressure by the US and China placing tariffs on each other's imports.
"It's all around Australia being seen as an ally of America," he said.
"In terms of the global perception, it can put pressure in the confidence of the Chinese as to where the Australia government sits.
"Some of the Australian government's language has caused disruption in relation to banning Huawei from its 5G network, and you can draw links between that debate and China's inquiry into claims of barley dumping."
China launched an investigation in November into whether Australia dumped barley on its markets between October 2017 and September 2018, which the industry denies.
The World Trade Organisation defines dumping as selling exports at a price lower than the exporting country's domestic market and/or lower than production costs which damages the importing country's domestic production.
"We made submissions to the inquiry in February and we are still awaiting a formal response from the Chinese government as to whether they've accepted this," Mr Weidemann said.
"There has been no new trade to China locked in. People are not confident in trading into China unless that's resolved, because they could impose tax on any cargoes which would have a big impact on the exporter.
"This could have a massive impact on barley pricing and the ongoing outlook for growing barley in Australia.
"A lot of the depth of the market has been built in the confidence in Chinese trade, so we're hoping this is resolved by the time we come around to harvest in October-November of this year."
Global Trade Atlas reports from 2018 show that China bought 4.7 million tonnes of Australian barley at $325 a tonne, nearly 77 per cent of all Australian barley exports that year.
A report released in April by the United States Department of Agriculture estimated Victoria accounted for 20 per cent of Australia's barley production.
National barley exports are forecast at 4.5 million tonnes in 2019-20.
Mr Weidemann said the more pressing concern for 2019 was the drought conditions, and whether there would be enough grain just to meet demand for livestock feed in Australia.
"If you look at current situation where we're importing grain, the issue for us is whether we're going to have enough produce out of this year's harvest to meet the demand that's coming," he said.
"We know there is very precarious spring forecast, and barley is a low-risk crop so at the moment it's prudent growers continue with normal cropping programs. I think the bigger decisions around barley for farmers will come during the 2020 and 2021 harvests, because this continuing non-purchasing."
Mr Weidemann said regardless of outcome of the US-China trade dispute, Grain Producers Australia would work to reduce the grain industry's reliance on China for barley exports.
He said there were currently no other overseas markets that could compensate for a drop in exports to China for beer brewing.
"In my opinion we've relied too heavily on the Chinese market because it's been easy," he said.
"We've been working on Indonesia with the free trade agreement, so there is an option there for us to export feed grain into but it's about getting them used to using barley. It's a new market we've not opened up before.
"And of course we're exploring opportunities in India at the moment, so from the industry's perspective India may hold some hope for the future as well, it's really over to the trade department as they work through these situations of trying to open up new markets."
Mr Weidemann urged the Department of Trade to use careful language when engaging with China over barley exports.
A spokeswoman from the Department of Trade said Australia's senior officials regularly discussed a range of bilateral and multilateral trade issues with their Chinese counterparts, including the investigations currently being undertaken by the Ministry of Commerce into Australian barley imports.
"The government will continue to work closely with the Australian barley industry to rigorously defend our interests," she said.
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