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Not all origins are equal in China's booming barley import market

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The UK could this autumn, or "even sooner", win access to the important Chinese barley import market – although the smallprint of the agreement will determine how much of a boost to shipments it might prove.

A team of official Chinese inspectors is due on Friday to report to Beijing on the findings of a two-week investigation into UK safeguards for ensuring the quality of its malting barley exports.

The officials "were pleased with what they saw", terming the UK systems "well managed", said Sarah Mann, exports manager at the Agriculture and Horticulture Development Board, a statutory organisation aimed at promoting UK crop farming.

However, a final decision will depend on Chinese political approval.

The board is hoping that China may use a visit by President Xi Jinping to the UK in October, or a visit by a British politician to Beijing, as an occasion to unveil an agreement, said Martin Grantley-Smith, AHDB head of business development.

"Hopefully we will have something by the autumn, and maybe even sooner," he told Agrimoney.com.

Thirst for beer

An agreement would see the UK follow European Union peers Denmark, Finland and France in winning consent to export to China, the second-ranked barley buyer after Saudi Arabia, with overall imports estimated by the International Grains Council at 7.5m tonnes this season and 6.5m tonnes for 2015-16.

Much of that is of feed barley, for which Chinese demand is relatively volatile, depending on the price of rival grains, and their availability.

However, a growing taste for beer has underpinned a more consistent demand for malting-grade barley, with Chinese beef consumption growing by an average of 7% a year over the past 15 years, according to Australia's Abares crop bureau.

Annual Chinese beer consumption per head soared from 17.4 litres in 2000 to 36.5 litres in 2013,

However, the country's own output of barley has shrunk from some 6m tonnes in 1966-67 to a forecast 1.9m-tonne crop expected this year by the IGC, as farmers have switched to crops such as corn and wheat for which the government operates a minimum-price support regime.

Big trade route

Even with the handful of EU countries currently granted Beijing approval for barley shipments, the bloc has become one of the top exporters to China, at 1.8m tonnes in 2014-15, according to the IGC.

That promoted it the second-ranked origin for Chinese barley imports, behind Australia on 3.6m tonnes.

However, France, for which China exacts less stringent export requirements than for Denmark and Finland, accounts for the vast majority of these volumes.

Of the 453,000 tonnes of EU barley shipped to China in the first three months of calendar 2015, some 430,000 tonnes, or 95%, came from France, IGC data show.

France vs Denmark

"It is not just about getting agreement to export to China, it is about the details of the protocol," said Matthias Wree, managing partner at Swiss-based malting barley house Evergrain.

There are 22 named weeds which Danish malting barley exports to China must be free of to clear customs, compared with 15 for France.

"That's the dominant reason why people tend to ship French malting barley to China, rather than from the other two countries," he told Agrimoney.com.

By Mike Verdin

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