Strengthened alliance between Russia, China and a Putin-controlled Ukraine could hurt WA grain exporters

A strengthened alliance between Russia, China and a Vladimir Putin-controlled Ukraine could spell trouble for WA grain exporters, economists warn. With China already having relaxed restrictions on imports of Russian wheat, there are fears Ukraine’s substantial supplies of grains and oil seeds, and particularly wheat, will be redirected to China, weakening WA exports to the global super power. “That relationship is already strong (between China and Russia),” CommSec senior economist Ryan Felsman said. “If there is that strengthening of those ties, what we could see on the back of that is we could see some increase in some of those wheat exports from Russia and Ukraine to China in particular.” The Black Sea region accounts for 34 per cent of global wheat exports. China has become a big buyer of WA grain in recent years. Last year alone, WA wheat exports to China totalled more than $212 million. But Australia and the rest of the world have been nervously watching on for weeks, as China’s relationship with Russia has strengthened. Vladimir Putin was at the recent Winter Olympics, where he and Chinese President Xi Jinping were more than happy to showcase their blossoming relationship. So far, China has refused to condemn Russia’s attack on Ukraine. Its easing of restrictions on imports of Russian wheat could help ease the impact of Western sanctions on Russia. A bigger, new supply of Russian-Ukrainian wheat would also help meet the growing food demands for China. “If you have got Russia and Ukraine together, they certainly will be the dominant producer for wheat,” Mr Felsman said. “Australia is the sixth biggest exporter of wheat. We are already behind Ukraine and Russia anyway. “But if China decided to take some of our (Australia’s) exports away, and redirect those imports to Russia, or to Ukraine, that would hurt (Australian) grain producers. “At the moment, wheat prices are lifting on the back of supply disruption because of the war. “But if we do see China demand more wheat from Russia and Ukraine eventually, once this situation settles, then that could heavily impact export volumes to China from Australia.” Mr Felsman said Australian wheat and grain producers would need to find alternative markets, if exports to China fell. “Australia has been able to find other markets (in the past),” he said. It’s a view shared by WA Agriculture Minister Alannah MacTiernan. “China has in the last couple of years become one of our more significant markets,” she said. “Last year it was somewhere between 15 and 20 per cent of our (grain) product. Ukraine is also a producer and exporter of iron ore. It has substantial natural reserves of iron ore, but exports 45 million tonnes of iron ore a year, compared with Australia’s more than 800 million tonnes a year. Former Rio Tinto executive Philip Kirchlechner said he did not expect a Russia-controlled Ukraine to lessen WA’s iron ore exports. “Ukraine exported 45 million tonnes of iron ore last year,” he said. “Western Australia exported 905 million tonnes (of iron ore last year). “The Ukraine situation will have very little impact (on WA’s iron ore exports).”