China may be forced to abandon Australian beef entirely in favour of American suppliers if the trade war with Beijing continues, a major company has warned.
Xiamen Xiangyu, which is owned by the Chinese government, buys 20,000 tonnes of beef from Australia every month.
But it warned that it may have to switch to US beef if Chinese bans on four of Australia’s biggest abattoirs aren’t lifted.
It threatens the future of Australian farmers’ $3.81 billion beef business with China, which accounts for 25 per cent of all exports of the meat.
Beijing announced a ban on meat imports from four large red meat abattoirs in May, citing problems with health certification and labelling.
Australian beef is seen on sale in a Beijing supermarket along with produce from America and Canada (pictured) amid threats that Aussie products could disappear from Chinese shelves
Cattle are seen on a farm in Inverell, New South Wales (pictured). Selling beef to China is worth $3.81 billion every year
It added fuel to concerns that Australia was being punished for Prime Minister Scott Morrison’s push for a coronavirus inquiry.
China also slapped an 80 per cent tariff on Australian barley, adding further woes to drought-ridden farmers.
Xiamen Xiangyu, with contracts worth millions of dollars, has since switched to other abattoirs in Australia, but warned the bans have increased costs and complicated trading.
‘If these four plants are not relisted as early as possible we will have to switch to US beef,’ Eric Huang, director of frozen food for the company, told the Australian Financial Review.
‘We have time to purchase more, to make up our supply to our end-users.
The coronavirus crisis has brought Australian and Chinese trade relations to an all-time low, despite China equating to 33 per cent of all exports (pictured, a shipping lane at Botany Bay)
Australia is known for its Wagyu beef (pictured) but many soon find itself shut out of the lucrative Chinese market
‘But if this lasts for six months it is going to be hard because moving from one plant to other plants not only increases costs but we also have to educate our end-users.’
His company is one of the biggest buyers of Australian beef in China, and will wait three months before switching to American stock, he explained.
Mr Huang also warned that there are ‘rumours’ of more Australian companies that could be delisted, as well as reports that the four plants could be relisted.
Six abattoirs were delisted in 2017, but then given the green light by China three months later.
On May 11, the Australian government was notified that four companies, two Queensland abattoirs owned by Australia’s largest meat processor, JBS, as well as Kilcoy Pastoral Company near Brisbane and Northern Co-operative Meat Company at Casino had been suspended from trading with China.
China cites labelling and health certificate requirements.
Mr Huang also warned that Australian beef was no longer very competitive, as tariffs on American beef said to come down.
His company has already abandoned Australian barley since the 80 per cent tariff was introduced, switching to France and Canada.
The barley tariffs were supposedly the result of an anti-dumping investigation.
As the row has rumbled on, China has accused of Australia of being a ‘frustrating’ and ‘un-friendly’ trading partner.
The COVID-19 outbreak is thought to have begun at a wet market in the Chinese city of Wuhan (pictured, a similar market reopened in Guangzhou on May 4)
A farmer is seen grappling with cattle at an Australian farm (pictured) but similar businesses could soon struggle if China stops buying Australian beef
The Global Times, a mouthpiece for the communist government, accused Australia of ‘exploiting’ China and presenting itself ‘as a victim’.
Australia sends between half and two-thirds of all its barley to China, making the tariff decision a massive blow to the $600 million a year industry.
Trade Minister Simon Birmingham revealed the government was given no advanced notice of China’s decision and called it ‘deeply disappointing’.
In April, Mr Morrison demanded an independent probe into the deadly respiratory virus and the World Health Organisation’s handling of the crisis.
In response, Chinese state media and leaders warned of trade retribution that could wipe $135 billion from the Australian economy.
A barley farmer is seen in central NSW (pictured) with the industry hit by drought and now by China’ crippling tariff
China claimed Australia was dumping barley and subsidising farmers, insisting the tariffs are nothing to do with coronavirus.
The tariff, to remain in place for five years, is set to cripple Australia’s drought-affected grain farmers.
Australia is the biggest barley supplier to China, exporting between $1.5 billion and $2 billion worth a year, which is more than half its exports.
China has also threatened to stop sending students to Australian universities, warning of an increase in racist attacks towards Asian people.