Wellard - Macro Tailwinds, page-17

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Australian beef exporters are on high alert following reports that China may temporarily suspend all meat imports from Australia and New Zealand due to concerns about foot and mouth disease. Other exporters were also alarmed yesterday by a Chinese media report which said China was suspending imports of Australian grain, dairy and other agricultural products into the country, a move that would potentially damage tens of billions of dollars of business. However, industry sources and media reports in China said later yesterday that those rumours were incorrect . It was also unclear if a ban had been applied to beef given Australia and New Zealand have not recorded any cases of the disease. Late yesterday afternoon, the Albanese government said the rumours were being treated seriously but so far were unsubstantiated. It had spent the day investigating them, including having the embassy in Beijing make inquiries. The New Zealand government was also investigating. The move initially raised fears that China was escalating its sanctions on Australian exports because of diplomatic tensions, but traders and executives at companies importing goods into China later said it was unclear if talk of potential bans was politically motivated or due to an over-reaction by China to foot and mouth. Australian and New Zealand exporters were scrambling early yesterday after a Chinese beef industry website, World Meat Imports Report, said Beijing was immediately suspending customs clearance and cargo release for all Australian and New Zealand agricultural commodities. The story posted on Chinese social media had been viewed more than 30,000 times by late yesterday morning. ‘‘ The calls from worried customers started pouring in from 6am,’’ one China-based executive importing agricultural products into the country said. However, other Chinese industry news sites said later that the report was incorrect and that the ban was only being applied to Australian and New Zealand beef. ‘‘ Only Australian beef has been suspended for import due to the problem of foot-and-mouth disease, and others are not affected,’’ China’s Dairy Online posted on social media. The Australian Meat Industry Council did not immediately respond to requests for comment. Sources said the beef industry was concerned but had not yet received any reports of shipments into China being blocked. Multiple executives working for companies importing goods to China told The Australian Financial Review they were alarmed by the reports, fearing an escalation of existing tariffs on Australian exports by Beijing. Some of Australia’s biggest abattoirs have been banned from China since 2020 and Beijing also has in place long-standing bans on Australian barley, wine, seafood and forestry products. Tony Seabrook, the president of Pastoralists and Graziers Association in Western Australia, said it would mark a new low in trade relations if China had banned all beef exports. ‘‘ They are out to do us economic harm and have been trying to do so for two years,’’ he said. High-level sources in Australia’s two biggest agricultural export industries, grain and meat, said they were aware of rumours of a blanket ban, but they had been unable to verify whether they were true and had received nothing official from Chinese authorities. However, they said they would not be surprised if China used the threat of foot-and-mouth disease to justify a ban on all meat products even though Australia remains free of the virus. Roger Fletcher, Australia’s biggest sheep meat exporter to China and a major player in the wool trade, said any blanket ban would represent a multibillion-dollar hit to the local farming industry. Mr Fletcher said he was hearing the same rumours as others across a range of industries, but nothing official from his network of contacts in China. ‘‘ Nothing is confirmed , but it is a big headache,’’ he said. ‘‘ And the government has got nothing at this stage. It is all Chinese whispers, but I don’t like the whispers I’m hearing.’’ Australian livestock producers are already living with the threat of an $80 billion hit if foot-and-mouth disease reaches the country, and with the live cattle trade to major customer Indonesia at a standstill while Jakarta tries to bring the island nation’s outbreak under control. Australian government forecaster ABARES was tipping the value of agricultural exports to hit a record $64.9 billion in 2022-23 despite the China ban already in place. Australia exported 148,000 tonnes of beef to China last year, down by 24 per cent on 2020. This represented a fifth of all Australian beef exports and was worth $US1.45 billion in bilateral trade even as China upheld its bans on nine Australian meat processing facilities. Nine Australian meatworks are still on China’s banned list. Some had their Chinese accreditation suspended two years ago over what the Australian industry has said were trivial issues with labelling. Claims that residue from a banned chemical were found in a piece of beef were used to justify at least one ban. Any further bans on Australian exports would mark an escalation in tensions between the two countries and scuttle any hopes that remain of the Albanese government resetting the relationship with Beijing. China’s ambassador to Australia, Xiao Qian, has said Beijing wants to repair relations with Canberra but offered no indication when bans on Australian exports could be lifted. Chinese import demand for wheat had been tipped to increase from already high levels with Australia on track for a third consecutive bumper harvest. However, with Russia’s invasion of Ukraine restricting grain exports from the Black Sea region, China agreed to permit imports of wheat and barley from all regions of the Russian Federation and it is expected to take big volumes of Russian wheat. Copyright © 2022 Australian Financial Review