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Canadian barley growers exploiting Australia’s troubles with China expose a vulnerability in any democratic alliance against Beijing

Australia is China’s favourite punching bag. Beijing has put up tariff walls to block imports of Australian barley and wine, and anecdotal evidence suggests that the world’s second-biggest economy is refusing shipments of beef, coal, lobster and timber from Down Under.

By most accounts, Australia’s government is being punished for speaking its mind. Among the offences: Prime Minister Scott Morrison’s call last April for an international investigation into China’s early handling of COVID-19, which was first detected in Wuhan in late 2019. Duties on barley went up the following month.

China’s willingness to throw its weight around has become a major concern for the biggest democracies. There is plenty of talk in Europe, North America and parts of Asia about strengthening alliances and showing solidarity with those that get knocked around by Beijing’s methods.

But if linking arms is the plan, someone forgot to send the memo to Canada’s barley farmers. Their entirely acceptable (and predictable) rush to exploit Australia’s predicament exposes a vulnerability in the West’s new containment strategy: to beat China, they will have to behave more like China. It’s unclear they have the stomach for it.

Canadian barley, which is used to make beer and livestock feed, had become something of an afterthought on the Prairies in recent years, usurped in the cash-crop hierarchy by lentils and peas, staples of vegan and vegetarian diets.

The farmers who stuck with barley were rewarded for their loyalty in 2020. They earned record cash receipts of about $1.1 billion, a 14 per cent increase from 2019 and only the second time the crop fetched more than $1 billion in a single calendar year, according to Statistics Canada.

A lot of hard work went into those returns. There was also some luck. In a year when entire industries were effectively ordered to close, agriculture was deemed essential, so farmers and their suppliers kept working throughout the pandemic. They had a good harvest and commodity prices surged as global lockdown measures eased. And, as Statistics Canada noted in its report on 2020 farm income, barley growers got an extra lift from “diplomatic and trade tensions with Australia.”

Canada’s barely exports to China rose by 18.5 per cent in 2020 from the previous year, according to data provided by Statistics Canada, and momentum only appears to be building. Shipments in the first quarter of 2021 were worth more than $290 million, an increase of 175 per cent from the same period last year.

The Canadians who are profiting at Australia’s expense don’t feel guilty about it. Commodity markets are global and doors are opening and closing all the time.

“We look at it as an opportunity to solidify those markets, so we do a lot of market development work with Chinese brewers and maltsters and the Chinese feeding industry,” said Tom Steve, general manager at Alberta Wheat and Barley Commissions, a farmer-led trade association. “China and Australia may resolve their trade issues, but we’re trying to take the opportunity to build trust and reliability as a supplier to the Chinese market.

Commodities could be leveraged in negotiations with Beijing, since China lacks much of what it needs to fuel its fast-growing economy. But restricting its access to food, energy and minerals would require heavy-handedness of the type that the big democratic countries say they want to combat. The legacy powers created a global market for goods after the Second World War. It would take nerve to undermine that creation by denying their citizens every opportunity to exploit it.

Former United States president Donald Trump attempted to confront China directly and left office with little to show for it. His departure opened the door for more cooperation and the leading democracies appear to want it in some fashion. U.S. President Joe Biden wants to stitch together an alliance of like-minded nations and Boris Johnson, Prime Minister of the United Kingdom and current chair of the G7 countries, invited Australia, India and South Korea to join this year’s talks, which will be dominated by China’s unapologetic belligerence. The U.S., European Union, U.K. and Canada all introduced sanctions earlier this year over China’s forced detention and “re-education” of the Uighur minority in Xinjiang.

Some lawmakers and activists in those places are even more restive. Canada’s Parliament voted earlier this year to call what China is doing in Xinjiang a genocide, even as Prime Minister Justin Trudeau’s government abstained. Last year, the Inter-Parliamentary Alliance on China, a group of democratically elected legislators from around the world that includes Canadian Garnett Genius, a member of Parliament from Alberta, called on their home countries to drink Australian wine to show solidarity with the beleaguered member of the family of democracies.

To be sure, it takes very little for the tables to turn, as pork exporters learned in the summer of 2019. “We can be shut out of the market in an instant if there’s a political decision made in China,” Steve said.

Perhaps governments in places such as Canada and the U.K. could get their exporters on side by creating conditions that offer more certainty. For example, a decision by the U.S. to re-enter the Trans-Pacific Partnership will create a commercial zone to rival the allure of China.

In the meantime, exporters that were encouraged by their governments to embrace globalization will continue to follow the money. Alberta’s barley growers are intent on convincing their new Chinese clients to stick with them, even if the governments of Australia and China resolve their differences. “Our production, we would argue, is more reliable,” Steve said.
Source: Financial Post

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