China still top market for Australia’s agriculture sector despite trade tensions

China remains Australian agriculture’s most valuable market, despite trade restrictions wiping more than a quarter off the value of its exports during 2020/21. Rural Bank’s latest agricultural trade report showed that Australia exported $14.6 billion of agricultural goods to China in 2020-21, which was a 26.2 per cent fall on the previous year as trade restrictions took their toll. Relations between Canberra and Beijing were triggered by the Morrison Government calling for an independent inquiry into the origins of COVID-19, resulting in sanctions to several Australian farm products. Despite the hit to products including wine, crayfish and barley, China still accounted for 21.8 per cent of total exports worth $49.6b. The value of Australian wine exports was hit hard by the strained relationship between China and Australia, falling by 9.4 per cent to $2.6b. WA wine exports to China fell from $21.3m in 2019/20 to $5m in 2020/21. Australia exported $1.1b of seafood, a decline of $152m or 11.9 per cent on a year earlier, driven by a reduction in the average export price. Of all states, WArecorded the biggest decline of $73.8m (down 20.8 per cent), after China’s unofficial ban on rock lobster exports, which represented 79 per cent of the State’s seafood exports. Simon Dundon, general manager sales partnerships and marketing at Rural Bank, said the coming year looked positive for Australian agriculture. However, the report acknowledged difficult times would continue for the wine and lobster industries unless the relationship between China and Australia improved. “Red meat, dairy, wool, horticulture and wine should grow in overall value, thanks to improved seasonal conditions across much of the country, which when coupled with rebounding commodity prices, should lead to growth in export value in the coming year — possibly the highest on record,” he said. Mr Dundon said no single market would fill the vacuum created by the restricted access to China (across all affected products). However, continued growth into a range of other markets and progress towards free trade agreements with the European Union and UK should provide Australian farmers with other opportunities for long-term growth. The report showed that the next biggest export destinations for Australian agriculture after China were Japan, US, Indonesia and South Korea. The value of total agricultural exports fell by 0.8 per cent from 2019/20 but they are expected to rebound this year, thanks to favourable production and demand outlooks as key export markets recover from COVID-19. NSW, South Australia and WA were the only three States to record export growth in 2020/21, thanks to strong performance in the cropping sector. WA exported $7.9b of agricultural produce, which was up 2.2 per cent. Crops accounted for 60.6 per cent of WA’sexport value, worth $4.8b, which was 9.8 per cent higher than a year earlier. WA saw the largest growth in the export value of wool, with a 7.8 per cent increase to $512 million. Most states recorded a decline in sheep industry export value in 2020/21. WA’s sheep exports fell by 20.3 per cent to $632.2m.