Nine farmers took a tour of malting companies and factories across China, to better understand the barley market in China for their exports.
80% of barley exported out of Western Australia goes to China, so it is an important market to understand in order to retain their export numbers. Likewise, Canadian barley exports to China are increasing at record levels.
The brewing industries prefer to purchase the same variety/varieties for consistency of flavor. They also prefer robust protein levels. In both these ways, Canadian barley has an edge on Australian barley. Canadian barley has higher protein levels, and they have only produced two varieties of barley in the past 10 years.
However, Canada has begun to experiment more with barley varieties, which might cause their barley exports to lose their edge.
Canada also has an advantage over Australia in the barley market in terms of price, as we discussed earlier this month.
China has a huge influence on the market, and they are changing gears. They are turning more and more away from rice and exporting more of other crops. They are even making 100% malt barley beer now.
In order to take advantage of this growing demand in China, it is important to understand the Chinese barley market, and what they are looking for.
China tour offers malting barley insight
A TOUR to China has given the South East Premium Wheat Growers Association (SEPWA) China a taste of local malt barley export demands.
A mixed group of nine farmers from the Esperance port zone, Department of Primary Industries and Research Development (DPIRD) researcher Jeremy Curry and SEPWA project co-ordinator Nigel Metz set off on a one week trip last month.
They visited malting companies and factories across the country and spoke about what they look for in malt barley and how Australian barley compares to other competitors’ supply sources.
Mr Metz said China was probably the destination of more than 80 per cent of export barley out of WA and they set the barometer of export prices.
“We were keen to learn about what are the driving factors in that market and in that process we looked particularly at the malting and the brewing demands for the supply chain,” Mr Metz said.
Some of the key feedback that the group received was about protein and varietal change.
“In WA and in our region in particular, we are very proactive in adopting new varieties because they bring yield and agronomic gains for the farmer, however in the brewing industry they always want to stay with the same variety because they are happy with the consistent flavour that variety gives them,” he said.
The group had a proactive discussion on what new varieties are coming and farmers on the trip helped the companies appreciate the driving factors for farm production and understand there will be new varieties in the market.
Another topical discussion was on protein levels and Australia’s key competitor in the Chinese market, Canada’s supply of malt barley.
“Canada traditionally has a more robust protein level and that has to do with more consistent varieties which are better performers than ours in protein level, but also more than likely better soil types than we have in WA,” he said.
Mr Metz said Canadian farmers had grown only two varieties for the past 10 years which meant China had been more comfortable buying Canadian varieties because of this consistency.
Canadian farmers have started adopting new varieties, which is a good sign for the Australian market because it will erode that point of difference.
The Chinese market is changing and even small variations can amount to massive demand changes.
The Chinese craft industry is going away from rice adjunct and traditionally China has had a high rice adjunct beer.
“They are even making 100 per cent malt beers now and that change will result in further demand for malting barley and that is a good thing for us,” Mr Metz said.
“You can’t step back from the scale of China, it is a monstrous market place and you can never generalise in that.”
Mr Metz said SEPWA organised the trip as part of its Royalties for Regions-funded grower group research and development grant which was based on the barley industry demand for brewing and the supply of WA export barley into the Asian brewing industry.
“The aim is to understand more of that demand base, so we can better pitch our product into that market and also hopefully fix a few things so we maintain that good supply reputation that we have,” he said.
“We have a very good supply reputation for reasons of logistics, so our bulk handling does a great job of supplying on time and also we are known as a good quality supplier.”
Mr Metz said if Australia stuck to its free trade agreements, Australian farmers could do better in the export market.