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China has become the number one market for Australian barley again, but the booming trade is ringing alarm bells for some.
Since tariffs on Australian barley were lifted in August 2023, trade with China now amounts to 78 per cent of Australian barley exports.
China pays a premium for Australian barley but the peak lobby group for grain growers and some analysts warn that being heavily reliant on China, which has a history of imposing sudden bans, is risky.
Barley going 'gangbusters'
Episode3 grains analyst Andrew Whitelaw said the Chinese barley market was going "gangbusters" because the market was dictated by price and China was prepared to pay more for Australian barley.
"I wasn't surprised by the fact that we saw an increase, but I was surprised by the amount," he said.
In December, 90 per cent of Australian barley exports were going to China.
Spread the risk
Mr Whitelaw warned sending that much grain to China carried some big risks.
"We have to be wary of the fact that China has imposed tariffs on our produce before and they could do it again," he said.
"We have seen other countries like India, in the past, impose tariffs on Australian produce as well."
Mr Whitelaw thought growers could instead reach out to new buyers in countries like the Middle East, Mexico, and Argentina.
"What we need to do is open up the doors to relax the regulations and allow other countries to buy barley from us," he said.
Sudden price drop
China slapped 80.5 per cent tariffs on barley in May 2020 after a dispute with the Morrison government, and that put a complete stop to the trade and forced Australian growers to find new markets.
The dispute was resolved in August 2023, but during the tariff period in 2022 about 43 per cent of the volume went to Saudi Arabia while Vietnam, the Philippines, and Kuwait also increased their imports.
The overall price of barley fell by 50 dollars a tonne on average.
The director of lobby group Grain Producers Australia, Andrew Weidemann, said that should send a warning to producers now that the tariffs had been lifted.
He said while China was the market that paid the most, the quest for new markets should continue.
"When the export market with China is back at 80 per cent, we are at risk again of a similar course of action should the political will of China change."
"We want to have systems in place and new markets in place, so we are not in that same position in the future and we have higher value markets for barley that we have cultivated to mitigate that risk of all the eggs being in one basket."
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