Australia’s grain producers have scoffed at a move by China to launch an anti-dumping investigation into billions of dollars in barley imports from Australia saying they fear it is politically motivated after Canberra signed security and infrastructure deals to counter Beijing’s influence in the Pacific.
“Frankly, Australia wouldn’t be dumping barley in China because it’s being sold at the world market price,” Grain Producers Australia chairman Andrew Weidemenn said.
“China is a highly politically driven country and there is no doubt when you mix business and politics there is a cocktail of disaster.”
Trade Minister Simon Birmingham on Monday played down suggestions the probe was politically motivated, saying the matter had been raised by industry within China weeks before the Asia Pacific summits over the weekend and it was not unusual for countries to investigate dumping allegations.
The move, which lawyers said was the first time China had launched an anti-dumping investigation into Australian imports, comes at a time when Australia has virtually no barley to export because of a 10-year low harvest in the eastern states and domestic demand for livestock feed.
China’s Commerce Ministry said it had launched an anti-dumping investigation into imports of barley originating from Australia. The investigation would cover alleged dumping from October 1, 2017, to September 30, 2018, the ministry said in a statement on its website.
Australia is China’s biggest customer for barley, which is used to brew beer and in livestock feed. China imported $US1.28 billion ($1.8 billion) worth of Australian barley in 2017, according to the Commerce Ministry.
The surprise move came after the United States agreed to partner with Australia to redevelop Papua New Guinea’s naval base at Manus Island. Australia, US, Japan and New Zealand also signed a $2.3 billion deal over the weekend to improve access to electricity and the internet in Papua New Guinea.
Senator Birmingham said the issues were unrelated. “We understand this investigation is the result of an application lodged from the China International Chamber of Commerce many weeks ago,” he said.
“It’s not unusual for countries to investigate dumping allegations made by local businesses or industry groups. People shouldn’t read any more into this than regulatory authorities doing their job, with whom we will of course co-operate. We are committed to maintaining a respectful relationship with China, whose ongoing economic growth we welcome and encourage.”
Some analysts in China said the anti-dumping probe, in response to complaints from the China Chamber of International Commerce that Australian exporters were selling barley at artificially lower prices, was a warning.
“It is not a retaliation, it is a warning. China is Australia’s biggest agricultural and mining product importer,” Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness, said.
The last time Australian exports to China came under pressure for alleged anti-dumping was in 2016, when the Chinese mining industry called on authorities to investigate iron ore imports from the world’s biggest miners.
However, other China watchers noted the anti-dumping investigation was likely to have been in the pipeline for some time.
“Global grain prices are at a very high level and the market is tight. It’s not the point in the market cycle where you would expect dumping,” Jeffrey Wilson, Perth USAsia Centre head of research said.
“We will have to wait to see what the allegations are but when you have half the country crying out for feed grain, I’m sceptical.”
The share price of one of Australia’s biggest grain producers, GrainCorp, had fallen 2.6 per cent as of 2.30pm on Monday.
The investigation will also look at impact on China’s domestic barley industry from January 1, 2014 to September 30, 2018.
Australian companies named in the anti-dumping investigation included GrainCorp, CBH Grain, Plum Grove, Premium Grain Handlers, WA Grains, Independent Grain Handlers, ADM Trading Australia, Australia Grain Export, Australian Growers Direct, Woodlands Hill Grain, and Australian Natural Foodstuffs.
Plum Grove managing director Andrew Young said Chinese actions were confusing.
Mr Young said Plum Grove had never made bulk shipments of barley to China and nor had several other of the exporters named.
The anti-dumping action had an immediate effect on farmers with major exporter CBH dropping its grower bid price for barley by almost $20 to under $300 a tonne and other traders staying out of the market.
CBH, a giant co-operative controlled by farmers in Western Australia, is on target to handle a bumper barley crop of 3.9 million tonnes with harvest in the state in top gear.
Australia sells malt and feed barley to China with much of the feed barley used in beer production.
The application letter for the anti-dumping investigation said the volume of barley imports from Australia jumped 67 per cent from 2014 to 2017 and prices fell by about a third during that time.
Chinese demand for barley to make malt for Chinese beer and for farm animal feed has surged in recent years.
China accounted for 60 to 70 per cent of Australia’s barley exports and it bought a record of more than 6 million tonnes, worth about $1.5 billion, in 2017.
Sales have fallen significantly this year due to the local drought.
Grains Industry Market Access Forum executive manager Tony Russell said he was “very perplexed” by China’s announcement.
“It’s certainly a very important market for Australian barley and there is certainly no grounds to think that any exporter would be selling barley to China at prices below other markets,” he said.
“China has been very, very keen to buy high quality Australian barley.”
The industry heard rumours over the past two weeks that Beijing could convert an anti-dumping application by a Chinese firm into an investigation.
The domestic Chinese industry has shrunk, with China’s annual barley production falling from 4 million tonnes annually to about 2 million tonnes over the last decade.
Barley is grown in Victoria, NSW, South Australia and Western Australia.