China barley tariffs may help Australian maltsters increase market share in South East Asia near term, but create bigger problems for their business.

China’s new tariffs on Australian barley are a painful blow to the nation’s maltsters, even though they will benefit from lower grain prices and could increase their market share in the export market. The world’s biggest malting group, Boortmalt, said the longer term impact of the 80.5 per cent tariffs had prompted concerns that without good pricing, Australian farmers may not grow malting barley, and there could be a lack of investment in breeding new varieties. Boortmalt Asia Pacific regional merchandising manager Simon Robertson said the main growth opportunity for Australian processed malt, following the new Chinese trade barriers, would be through gaining market share into South East Asia. China and Australia compete to sell processed malt made from Australian barley into these markets, and Australia could increase its customers seeking product made from Australian grain, Mr Robertson added. He said China was a net exporter of processed malt, so there was little scope to get considerable volumes of Australian processed product directly into that market. The longer-term downsides outweigh short-term opportunities, he said. “We need breeders to be investing in new barley varieties and we need growers to be growing barley. All parts of the supply chain and industry in Australia need to prosper, and part of that is having viable market outlet into China. If that is taken off the table then the whole industry is affected.” The Chinese Government put the 80.5 per cent punitive tariffs on Australian barley last week following an 18-month investigation into allegations Australia dumped barley on the Chinese market. Boortmalt, part of a French farmer co-operative Axereal which acquired the former Joe White Malting business from Cargill last year, has capacity to process 250,000 tonnes of barley in Perth. Across six plants in five states, Boortmalt’s capacity is 500,000t. Newly listed United Malt, recently demerged from Grain Corp, has capacity for about 50,000t in Perth, part of the 250,000t across its three Australian plants. Typically about 99 per cent of WA’s processed malt is exported, while maltsters in the eastern states supply major Australian brewers. CBH head of marketing and trading Jason Craig said there could be scope to supply more barley to domestic maltsters, but pointed to demand being subdued in the short term because beer consumption had declined amid the global chaos caused by COVID-19. Australian maltsters were not operating at capacity because consumption in China and South-East Asia had plunged 30-40 per cent because of COVID restrictions, he said. Mr Craig said the Australian Government and industry was working hard to open new markets, particularly for malting barley into India.

China barley tariffs may help Australian maltsters increase market share in South East Asia near term, but create bigger problems for their business.

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