Eyes wide open

There has been plenty of attention recently on the likely lifting of the tariffs imposed by the Chinese Communist Party on imports of Australian barley into China.

The tariffs were introduced because, apparently, we were dumping our barley into that market at prices lower than the prevailing Australian price.

It had nothing to do with global politics and definitely not designed to bring us to heel. Same with the bans on coal, wine and lobster.

Since the imposition of the barley tariffs in 2020, we have been able to find other willing buyers for our barley.

Moving successive large crops has been logistically challenging, but the buyers were there.

It is generally accepted though, that the loss of the Chinese market has reduced the price received by our growers in the order of $30 to $50 a tonne.

The dilemma now for the Aussie barley industry is what to do if China removes all tariffs.

Do we revert to old habits and ship as much as we can to China? Or do we continue to develop new markets to ensure we are not too dependent on one customer?

This is not a pitch for a return to the days of statutory marketing, but under that system, when all exports were managed by the Australian Barley Board, the industry could make decisions based on long-term objectives.

Market development was seen as a smart investment.

While we have been in China’s sin bin, groups such as the Australian Grains Export Innovation Centre have done a great job of promoting our barley into other markets. But in this deregulated environment, who will trade into those markets if the price is $30 a tonne lower than China? Are traders, and growers, going to prioritise market development over today’s best bid? Probably not.

So what have we learned from this?

Hopefully, we have all learned freedom to trade is in everyone’s interests.

Yes, governments will at times intervene to satisfy domestic political agendas, but in the main, let the business to business activity continue away from the glare of political posturing.

We have learned high dependency on one market is a risky strategy. But in a world where our organisational structures encourage short term thinking, how do we manage this risk?

Governments think only in election cycles and the next poll.

ASX-listed companies focus on the next six-month reporting period and the analyst updates.

And trading companies look to the next profit and loss statement and corresponding impact on the bonus pool.

It seems inevitable then, with barley, it will be all eyes to China again.

As farmers, we do think long term with key issues such as soil health, weed management and pest management.

But when it comes to marketing our barley I suspect we will be like everyone else – we will chase the cash. And if we do that with eyes wide open, that’s okay.

Just remember we should not complain next time we are on someone’s blacklist.

Matthews, D. (2023). From AgLife column series. The Weekly Advertiser (AgLife), various issues.