The majority of Australian food export prices slump owing to the demand downturn and trade tensions with China. Food exports from Australia to drop by 10%.
Agriculture Exports from Australia Drop by 10%
Australian Bureau of Agricultural Resource Economics and Sciences (ABARES) projects agriculture exports to decline to A$43.5 billion ($31.7 billion). The gloomy forecast for meat, wheat, barley, and wine has come amid Chinese trade restrictions and a virus-driven slump in demand.
Drop in the Prices of Barley and Wheat
The agency estimates an increase of 31% in the value of barley exports in 2020-21 from a year earlier with a 21% drop in prices. Besides, production is expected to jump 25% due to good rainfall. The agency reported that the costs of feed barley would fall to A$230 per ton. This is 17% below the world indicator price. However, the country has explored Thailand as its new market for barley.
Further, Abares mentioned Japan and Saudi Arabia as potential buyers. IKON Commodities CEO Ole Houe said that Australia exported as less as 2% (around less than 100,000 tons)to the Southeast Asian nation last year. But, this year the Australian exporters have shipped well over 600,000 tons and might reach 800,000 tons.
Despite stringent inspections stepped up by China on Australian wheat shipments, wheat exports will rise 27%, however, with a 21% price down. This is because of the free trade agreement with Indonesia cutting feed grain tariffs.
Meat and Wine Exports
Farmers in Australia are choosing to preserve livestock over slaughtering to rebuild herds after years of drought. The slaughter rate has dropped over 20%, decreasing beef production 18% lower on year in 2020–21 to 1.9 million tons. That said, China has banned Australian meat imports alleging contamination violations. Besides, Covid-19 testing at Chinese ports has added to a decrease in exports of minced meat. For now, beef has found its way to markets of South Korea, Japan, and the US. Likewise, wine exports have been hit owing to COVID induced decreased demand from restaurants and hotels.
In all, souring ties with China and COVID pandemic together have reduced food exports from Australia.