Political risks for the Australia-China agriculture trade

By Dr Jeffrey Wilson and Gemma King

In the last decade, China has emerged as Australia’s most important agricultural partner. It is Australia’s fastest growing market, and presently accounts for one-third of agricultural exports.
 
However, deteriorating political relations between the Chinese and Australian governments have cast a shadow over the bilateral trade. In recent months, China has applied punitive trade barriers to barley and beef exports, with the possibility that more sectors may be affected.
 
Developments in the US-China trade war compound these challenges. China has agreed to double imports of US farm goods under the “Phase One” trade deal, which will displace other suppliers such as Australia from the market.
 
As a result of these two political shocks, Australian agriculture now faces unprecedented headwinds its largest export market. The grains, beef, seafood, dairy, wine, horticulture and cotton trades with China are at greatest risk.
 
The Australian farm sector should diversify its trade by focusing market development on less risk-exposed markets in the Indo-Pacific. Vietnam, India and Indonesia (particularly in light of the IA-CEPA agreement) should be accorded immediate priority.