Australian farmers warn China trade spat will cost them $28bn

Australian farmers have warned that the country’s trade dispute with China and supply chain disruption linked to the coronavirus pandemic will cost the industry $28bn over the next decade.

In a pre-budget submission published on Friday, the National Farmers’ Federation appealed to the government to invest A$3.5bn (US$2.66bn) to support a trade strategy aimed at diversifying the nation’s export markets and improving supply chains.

The industry’s goal of boosting the annual value of farm production to A$100bn by 2030 will be “severely challenged” by trade disruption unless more support can be provided by Canberra, it warned.

Beijing has targeted Australia’s farm sector over the past 18 months, slapping trade sanctions on barley, seafood, wine and other exports as bilateral ties have sunk to their lowest level in a generation. Relations soured after Canberra called for an international probe into the origins of Covid-19 and resisted Beijing’s more aggressive foreign policy.

The deterioration in bilateral ties has forced producers to seek other markets and threatens to torpedo industry plans to develop Australia into the “food bowl” of Asia on the back of soaring Chinese demand.

“Recent disruptions will cost the industry A$36.9bn this decade,” said Tony Mahar, chief executive of the NFF, Australia’s main national lobby group for farmers.

“To counter these headwinds, a long-term trade strategy that deepens existing markets, diversifies export destinations, improves supply chains and builds domestic value-adding capabilities is a must.”

The NFF has submitted a shopping list of funding requests to Canberra for the next four years, including A$1bn for trade-related activities such as improving export supply chains, raising market development activities and increasing government resources to improve agricultural market access.

Many of the agricultural sectors worst hit by Beijing’s trade sanctions, which included punitive tariffs on wine and barley exports and technical trade barriers on beef and seafood, are racing to diversify away from China.

Bruce Tyrrell, whose family has been making wine since 1858 in the Hunter Valley, a region north of Sydney, said the anti-dumping tariffs imposed by Beijing had effectively closed the Chinese market.

“China was Australia’s biggest and most profitable market so it has been a big hit,” he said. “When the anti-dumping inquiry began last July, we immediately began to develop existing and new markets. None will replace China, but it has helped.”

Tyrrells has expanded in the US and Canada, reopened in Sri Lanka and entered Uzbekistan as a market.

Some farm sectors have enjoyed greater success in finding alternative markets for produce previously destined for China. Last month, CBH Group, a grain producer, said it had exported its first cargo of malt barley to Mexico, and is reopening a Saudi Arabian market for feed barley.

Nevertheless, the loss of the Chinese market remains a big worry for the farm sector because of its scale and profitability, according to farm analysts.

Source: Economy - ft.com