The alcohol ban added to SA’s barley bounty, and the government needs to prioritise countries for export, such as China, amid strong competition
The SA barley industry is set to face a demand slump emanating from the coronavirus-induced alcohol ban, when there is a predicted record 2020/2021 farm production harvest. SA could produce about 505,215 tonnes of barley in 2020/2021, up 46% from the previous season. This is a result of increased area plantings and expected higher yields following favourable rainfall in the Western Cape.
The irony of a historically large barley output amid a predicted fall in demand from processors creates new market uncertainty — where are farmers going to sell their barley? SA might have to explore export opportunities for its surplus beyond traditional markets. It would be worth considering key barley importing countries in the global market such as China, Iran, Saudi Arabia, the Netherlands and Belgium.
Barley producers and exporters could consider key additional factors such as tariff and non-tariff barriers associated with exporting to these countries. The full scope of the latter is a matter that requires further analysis and technical support from the department of agriculture, land reform and rural development, which will provide perspectives around the plant health regulations that would need to be met to access these markets.
The departments should work together with industry in a co-ordinated effort to access these markets. The public-private partnership effort of developing a market entry strategy should ideally form part of a longer-term strategy designed to provide alternative options in the event of a decline in domestic usage of barley, as many in the market anticipate.
However, China has since placed import tariffs of 80.5% on Australia’s barley, which provides a window of opportunity for other competitive suppliers. SA could be one such supplier to China, and this is a path SA’s government and industry should explore and prioritise, in addition to other key markets. We think Australia might also be looking for markets for its barley, which could present tough competition for SA. Hence, China should be prioritised.
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