China puts Australia on notice over wheat exports

China is increasingly taking a central role in world wheat production, growing larger volumes with lower costs per hectare.(ABC Rural: Kit Mochan). Sketched by the Pan Pacific Agency.

CANBERRA, Sep 14, 2020, ABC News. Australian wheat producers have been dragged into the growing political and trade tussle between Canberra and Beijing, after China warned it would put Australian exports under the microscope, ABC News reported.

In the latest sign of souring relations between the two countries, China’s General Administration of Customs has issued a notice in the past two weeks saying it will apply “enhanced inspection” efforts on shipments of Australian wheat.

It comes at a delicate time for wheat growers, who are believed to have forward-sold more than a dozen shipments to China for December and January worth almost $250 million.

In May, Australia’s barley trade with China — once worth $1.6 billion a year — was all but destroyed after Beijing imposed crippling 80 per cent tariffs.

‘Huge concern’

Nick Carracher, chief executive of Geelong-based market analyst Lachstock Consulting, said the decision by China was worrying given the value and volume of wheat already sold.

He said the move appeared to be political given China’s need for feed grain and the dwindling nature of its own reserves.

It also had echoes of Beijing’s decision to reject barley shipments sent by giant WA grain handler CBH on grounds the vessels were contaminated with “pests”, he added.

“It’s obviously going to be a huge concern to those people who have forward business in China, the implications for the vessels that haven’t unloaded yet.

“But one thing that is very clear is that China has this increased willingness to scrutineer the vessels that are coming in.

“It’s definitely a very nervous time for the guys that have got forward business on.”

According to Mr Carracher, while the Australian wheat trade with China had been smaller than exports of barley in recent years, activity had been picking up ahead of this year’s harvest.

Despite minimal flows last year in the face of severe drought in the eastern States, exports amounted to about $300 million in 2017-18 and almost $500 million in 2016-17.

CBH, Australia’s biggest grain handler, declined a request for an interview.

Instead, the co-operative issued a statement in which it said: “The CBH Group is confident that the grain we export from Western Australia meets all Australian phytosanitary export requirements, whether it is barley, wheat or other products.”

Grain Producers Australia chairman Andrew Weidemann said the news was no surprise given events earlier this month.

“This is not unexpected that they would heighten their increased surveillance on any grain, or any producer really, transferring from Australia to China at the moment,” Mr Weidemann said.

“I think the trade (participants) are well aware of the current political environment between Australia and China and are looking to export (grain) as well as they can within tolerance.”

Mr Weidemann said it was always concerning when there were problems with trading partners but he expected Australian grain arriving in China to meet quality controls.

He said issues had previously arisen because of differences in sampling techniques and suggested harmonising the countries’ approaches could help avoid problems in the future.

“We have flagged doing a research project with the Chinese around snails that, unfortunately, has been lost with all of the discussions we’ve been having recently around the trade of barley and tariffs between our two countries,” he said.

Federal Agriculture Minister David Littleproud has been contacted for comment.

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