China tariff on Australia’s barley reshapes global trade

JENS KASTNER and DIMITRI SIMES, Contributing writersMarch 19, 2021 14:57 JST

HAMBURG, Germany/MOSCOW — Barley prices around the world are rising sharply as China sucks in crops from elsewhere after hitting Australia with steep tariffs last year as part of a diplomatic spat.

Prior to May 2020, Australia was China’s main barley source. But Chinese importers are now escaping the whopping 80.5% tariff on Australian barley by buying up unprecedented volumes from France, Argentina, Canada and Ukraine. Australian farmers, meanwhile, are finding new outlets.

In the 12 months to the end of this June, China will buy 6.7 million tons or barley, up from 5.5 million tons last year, according to the International Grain Council.

According to the IGC Grains and Oilseeds Index, barley prices in France, Germany, Australia, the Black Sea region and Argentina were $258 per ton on March 5, up 33% on the year and markedly outpacing wheat’s 22% gain in the same period.

„There is a growing demand from China’s livestock industry for barley as a substitute for expensive corn and other feed grains,“ Dan Wang, chief economist at Hang Seng Bank China, told Nikkei Asia.

„The Chinese pork industry is still below the 2017 production capacity, so we will see rapid capacity build-up in at least the next two years, while the demand for barley to make high-end liquor is rising as well, which is a trend that was accelerated post-COVID,“ she added.

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