Australia has taken China’s high barley tariffs to the World Trade Organisation (WTO), with Rabobank saying 2021 could be a watershed year for the country’s agriculture sector as it faces increased supply risks from China. Australia will begin to shift away from its reliance on agricultural exports from China as diplomatic tensions between the two countries continue.
Rabobank Australia’s food and agriculture comprehensive business research at hunter (Tim Hunt) said in a statement, supply the Chinese market risks have increased, he said the current encountered difficulties, is not clear whether master Beijing will continue to shrink over the next few years is going to buy Australian food and agricultural products. Australia’s agricultural sector will bear the brute as tensions between the governments in Beijing and Canberra escalate, prompting China to impose a series of trade measures restricting imports of Australian beef, barley, lobster, wine and timber.
While the overall economic impact of China’s ban, either official or unofficial, has been relatively small for now, some industries have already been hit hard by suppliers being forced to abandon their biggest market and look elsewhere for new customers. “While nature is currently providing support to Australian farmers with abundant rainfall and improved crop yields, the Chinese government is in a decidedly less generous mood,” the statement said.
Looking ahead, Rabobank said reducing reliance on the Chinese market is a key transition point for Australia, as the Australian agriculture sector must see growth in the coming year. Strong demand, limited sources of supply and high prices for agricultural commodities will make the task of moving away from China’s current position look less daunting. Australian agriculture also needs to increase its focus on environmental sustainability and mitigate a potential weakening in demand as the government in Canberra wants to withdraw aid to consumers who supported food and fibre demand during the pandemic, Hunt said.
Rabobank’s outlook for specific Australian commodities in 2021:
Wheat: Strong global demand should keep prices firm throughout the year
Feed grains: Global feed grains demand increases and supply constraints support price action in 2021
Beef: During the reconstruction year, favorable conditions triggered an increase in breeding and slaughter volumes, keeping beef prices firm
Cotton: After the new crown epidemic, the demand picks up, and the cotton output will rebound significantly
Sugar: Global supply forecast for 2021 is balanced, but the outlook is affected by La Nina, trade volumes and the pandemic
Wine: Food service disruptions related to the pandemic will continue to weigh on demand for wine sales, but geopolitical tensions with China will weigh on average export prices
Returning to Australia’s review of the barley issue at the World Trade Organization, major grain exporters Canada and Russia have formally asked to participate in WTO consultations. Late last year, Australia launched a challenge for an independent adjudicator, allowing Canada and Russia to become third parties.
Dave McKeon, the head of the Grain Growers, a farm lobby group, said their participation was not an expression of support for either side in the dispute, and that China could end up blocking participation by Canada and Russia. “At this stage of the case, China does have the ability to choose whether or not to allow them to join as a third party in the case, but it is very unusual to see China reject one of its major trading partners,” he said.
Mr McCain sees the involvement of Canada and Russia in the case as countries with an interest in trade that are seeking more information about the dispute over their biggest customers. “It’s kind of like if you’re interested in what’s going on, click the subscribe button here,” he explained. Australian Trade Minister Dan Teihan noted that both Canada and Russia had outlined substantive trade benefits in the negotiations.