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Wheat growers wary of China tariff threat following bumper crop

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The state’s wheat farmers are bracing to be the next target of Chinese sanctions as more tariffs on Australian wine kick in.

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The Chinese Ministry of Commerce last week announced it would implement preliminary countervailing duties of about 6.3 per cent on Australian bottled wine imports.

The decision comes 12 days after it implemented provisional anti-dumping duties of up to 212 per cent on Australian bottled wine, which effectively made the Chinese market unviable to Australian wine businesses.

Cotton and wheat farmers have been warned they could be next after China also this week extended sanctions on Australian timber and slapped new ones on lamb.

The grains industry is still reeling after China imposed a combined 80.5 per cent tariff on Australian barley in May, comprised of a 73.6 per cent anti-dumping duty and a 6.9 per cent countervailing duty.

The wheat threat comes as SA farmers are completing a bumper 9-million-tonne harvest, the best in recent years.

Grain Producers SA chair Adrian McCabe said the federal bodies had been liaising with the trade and agriculture ministers on the China trade issue “but this is just another step down the wrong road at the moment”.

However, he said although some SA wheat was exported to China, it was a more easily traded commodity than high-quality malting barley and would be more easily sold elsewhere.

“Wheat is a more liquid commodity compared to our premium malting barley that had a niche market into China,” McCabe said.

“But there’s no doubt it’s putting some pressure on a massive harvest here in South Australia.

“It’s a really difficult one for us, it’s a government to government issue but it does affect our growers.”

Australian Grape & Wine Chief Executive Tony Battaglene said the latest round of Chinese sanctions on the embattled wine industry was “deeply disappointing”.

“The allegation that Australian grape growers and winemakers receive trade-distorting subsidies demonstrates a fundamental misunderstanding of our sector,” he said.

“Australian grape growers and winemakers have been competitive in China because of their efficiency and the quality of the product. We don’t understand how Australia is being accused of benefiting from subsidies, while other wine-producing nations enjoy significant government subsidies and continue to export to China”.

Each year, the OECD’s highly-regarded Producer Support Estimate (PSE) reports on the levels of trade-distorting subsidies that national governments provide to their agriculture sector.

In 2020, the OECD estimated that Australian farmers received about 2 per cent of receipts as a result of government measures, second only to New Zealand.

By contrast, according to the report, Chinese farmers receive a PSE of around 13.3 per cent and EU countries provide around 19 per cent on average.

“The facts speak for themselves. We are not dumping wine in China, and as the OECD points out, our producers are not subsidised in any way that would harm the Chinese wine sector,” Battaglene said.

“Chinese consumers buy Australian wines because they enjoy them, it’s that simple. It’s a pity they won’t have the opportunity to do this in the near future.”

“My message to all Australians right now is this: Buy local! Enjoy your favourite Australian wine in moderation this summer and raise a glass to the grape growers and winemakers doing it tough.”

Trade Minister Simon Birmingham said China had displayed an unacceptable pattern of behaviour this year that undermined its free trade deal with Australia and flouted global commitments to the World Trade Organisation.

“Australia is not the only country that has seen these types of punitive measures and I expect the rest of the world will be watching quite closely what is happening in Australia,” he told ABC radio on Thursday.

“This is damaging not just in terms of the business or trade relationship, but it is damaging in terms of heightening the level of risk and concern that businesses right around the world have in terms of dealing with China.

“It doesn’t just increase that risk profile for Australian businesses, it does so for everyone.”

China has also imposed sanctions and restrictions against Australian beef, lamb, lobsters, timber and coal in recent months as diplomatic relations sink to new lows.

The Chinese government is furious about Australia’s calls for an investigation into the origins of coronavirus, its vocal criticism of human rights abuses, and the imposition of foreign investment and interference laws.

 – with AAP

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