Australia and China have signed a new agreement covering agricultural science, technology, two-way investment and trade
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
GAIN Report Number: AS1315
Australia and China sign Agricultural Agreement
Policy and Program Announcements
Livestock and Products
Hugh Maginnis, Agricultural Counselor
Rebecca Gowen, Agricultural Specialist
Australia and China have signed a new agreement covering agricultural science, technology, two-way
investment and trade
Agricultural Investment and Trade Agreement
On April 23rd, the Australian Minister for Agriculture, Fisheries and Forestry, Joe Ludwig met with the Chinese
Agriculture Minister, Han Changfu on the occasion of Minister Han’s first visit to Australia. Minister Han was in
Australia to participate in the Joint Agricultural Commission to discuss agricultural trade, policies and
cooperation between Australia and China.
During the visit a new agriculture agreement was signed between the two countries. The agreement covers
science and technology, two-way investment and trade.
The deal carries major significance for Australia. China is the most valuable export destination for Australian
agriculture. In 2012 total Australian farm exports to China were valued at over $7 billion. Key products
exported to China included wool, cotton, grain (predominantly wheat), meat, wine and dairy products.
Table 1 Australian agricultural exports to China
2010 2011 2012
Product ($USD million) ($USD million) ($USD million)
Wool $ 1,504 $ 2,093 $ 1,946
Cotton $ 377 $ 1,535 $ 1,836
Grain and seed $ 448 $ 728 $ 1,172
Meat $ 149 $ 232 $ 411
Wine $ 148 $ 202 $ 240
Dairy $ 128 $ 138 $ 167
The visit had a particularly significant outcome for Australian beef exports, as China agreed to accredit 28
Australian cold storage facilities and approved for export four Australian red meat processing plants. The deal
will allow exporters to consolidate shipments of beef close to ports which will increase the efficiency and
competitiveness of Australian product.
Over the past two years Australian exports of beef to China have increased four-fold. In February 2013 exports
to China reached a monthly record of 11,866 tons making it the third largest destination for Australian beef
exports behind Japan and the United States in that period..
Figure 1 Australian beef exports by destination – 2012
China is also the most valuable destination for United States agricultural exports, which totaled $26 billion in
2012. Key commodities for the United States also include grain, cotton, meat and dairy products. US beef
exports to China are less than 10 percent of the size of Australian exports but the United States is the largest
supplier of pork and the second largest supplier of poultry products to China.
The visit from the Chinese agriculture minister reflects a continuing strengthening in the relationship between
Australia and China and the focus of the current Australian government on opportunities in Asia. In October
2012 the Australian Government released the Australia in the Asian Century White Paper which identifies the
growing Asian population and associated increase in food demand as a major opportunity for Australian
Australia already has free-trade-agreements with a number of trading partners in the Asia-Pacific region
including New Zealand and Malaysia and further agreements are under negotiation with China, India, Indonesia,
Japan and South Korea.
Trade and investment between Australia and China is two-way with Australia importing $US764 million worth of
agricultural products from China in 2012. There has also been significant interest from Chinese investors in
Australian agriculture. In 2012 a Chinese-Japanese consortium, Lempriere and Shandong RuYi Group purchased
the largest irrigated farm in the southern hemisphere, Cubbie Station in southern Queensland. Cubbie has the
potential to grow 330,000 bales of cotton and holds 460,000 mega-litres of water licences. Another Chinese
company was paid $560 million to lease the total area of phase two of the Ord River Irrigation Area (ORIA) in
northern Australia. Under the terms of the 99-year lease Shanghai Zhongfu has to develop the land for irrigation
on which they intend to grow sugarcane and they must also build a sugar mill.
Both of these investments have been somewhat controversial, the first due to the large water entitlements
associated with Cubbie Station and the potential loss of local jobs. The Ord investment was controversial
because two Australian companies were the unsuccessful bidders and even though the price paid exceeded the
limit required to be reviewed by the Foreign Investment Review Board this did not occur because it is only a
lease, not a permanent purchase.
These developments have the potential to increase Australia’s export competitiveness relative to the United
States in the Chinese market. This will vary by commodity, and key competitive commodities such as grains and
cotton are subject to