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Phase One Trade Bolsters Chinese Demand for U.S. Barley, Malt
USAgNet - 06/30/2020

With a freshly minted U.S. barley import protocol in place, the U.S. Grains Council (USGC) is exploring how U.S. feed barley and U.S. malt can help supply growing Chinese feed and brewing industries.

"Generating more malt barley sales matches U.S. farmer preference for contract growing, but there is also significant demand for feed barley in China," said Bryan Lohmar, USGC director in China. "While the United States currently has a limited exportable supply of U.S. barley, the long-term potential for sales is worth exploring with Chinese importers and end-users."

In a webinar last week, the Council brought together representatives from the Chinese feed and livestock industry and the Chinese brewing industry, two U.S. barley exporters and a U.S. crop economist. The webinar also included two Chinese end-users who currently import barley -- one representing the feed and livestock industry and the other from the malting industry.

The webinar covered U.S. barley production, use and export trends. One malt barley importer, who arranged for his entire department to participate, said activities like these help systematically introduce the U.S. export supply chain to Chinese importers by providing a better understanding of the potential for U.S. barley imports.

"Customers greatly appreciated the market insight from the U.S. barley exporters who participated in the webinar," Lohmar said. "The webinar exceeded our expectations. The customers were engaged and asked questions about exportable supplies of U.S. barley and the logistics of barley movement."

China imports five to 10 million tons of barley each year with fluctuations due to changes in domestic policy and global feed barley supplies. Traditionally, Australia is China's primary barley supplier, trading two to five million tons annually. However, Australian barley is currently subject to anti-dumping duties of around 80 percent, which severely limits exports to China.

In contrast, in May, the United States and China agreed to a phytosanitary protocol for U.S. barley being shipped into China, a market development achievement years in the making finally accomplished with a boost from the U.S.-China Phase One deal signed in January.

The Council is now working with the USDA's Animal and Plant Health Inspection Service (USDA-APHIS) and Chinese officials to develop fumigation and industry best practices requirements, and the Council and barley industry will work to ensure potential exporters meet administrative requirements to sell to China.

China also has significant potential for U.S. malt exports. The country is the world's largest beer producer and home to a small, but rapidly growing, craft beer industry. Malt import potential into China is smaller than the feed market -- imports of 7,000 to 13,000 tons annually -- but represents a value-added market for U.S. barley farmers and malt producers.

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