FARMERS about to spray paddocks prior to sowing this season’s crops may find bargain prices for some herbicides have dried up.
Assistant Minister for Science, Jobs and Innovation Zed Seselja last month approved an anti-dumping notice which imposed an interim dumping duty rate of 35.3 per cent on dichlorophenoxy-acetic acid (2,4-D) in all its forms imported from China.
An exception is 2,4-D exported by Shandong Weifang Rainbow Chemical Co Ltd, China’s largest exporter by volume of agricultural herbicides to Australia and the only Chinese exporter to respond to an Anti-Dumping Commission (ADC) request for information.
Importers of 2,4-D sourced from Rainbow Chemical now pay 25.6pc duty to the Department of Home Affairs.
The amount of duty owing is calculated by multiplying the 2,4-D free-on-board export price invoiced by the Chinese exporter by the applicable new rate.
An ADC report acknowledged Chinese-sourced 2,4-D is the “price setter” for the chemical in Australia and its market analysis has indicated it was being “dumped” in Australia last financial year by Chinese manufacturers.
Active constituent in a range of selective broad-leaf herbicides marketed in Australia by at least 16 agriculture chemical suppliers, 2,4-D and formulations containing it are widely used in WA’s broadacre cropping programs as pre-sowing and post-emergent weed sprays.
The ADC began its latest review of 2,4-D imports from China last July after an application by Nufarm Ltd, Australia’s only fully-integrated 2,4-D producer.
According to the Commission, the chemical is imported in several forms including as raw materials acid, “intermediate” salts and esters products and fully-formulated ready-to-use herbicides.
The ADC report and recommendations approved by Mr Seselja do not clearly spell out how the duties are calculated on fully-formulated imports.
The duties came into effect without fanfare on March 24 and, at this stage, will continue to apply for five years.
Some anti-dumping measures have applied to Chinese 2,4-D imports since an initial investigation in 2003 and two previous reviews before the latest one.
No fixed duties applied to imported Chinese 2,4-D prior to March 24, but there were penalties for companies which charged below a confidential “ascertained export price” – a notional fair price supposed to prevent dumping.
The low-key ADC review and imposition of import duties caught WA-based agchemicals producer, importer and supplier 4Farmers Australia Pty Ltd, along with WAFarmers and the Grains Industry Association WA (GIWA), unawares.
A formal notice was signed by Mr Seselja on March 5 and public notification of the 2,4-D duties appeared as a two-line notification – one of 50 similar notifications – on the ADC website.
At the time Farm Weekly went to press it had not yet appeared under customs “notices” on the Department of Home Affairs website which lists changes to tariffs and other matters to do with imports and exports, but after some searching, could be cross referenced to the notice on the ADC website.
A 30-day period in which interested parties could seek a review of the duties decision had expired before 4Farmers, WAFarmers and GIWA were aware they had been imposed.
4Farmers’ general manager Neil Mortimore said he only became aware of the duties about a week ago when completing paperwork to bring a new shipment of 2,4-D from China to Perth.
WAFarmers said it was “not made aware of the review (of 2,4-D anti-dumping measures) until after the feedback period had closed”.
“The organisation was informed about the issue only after 4Farmers called to enquire whether WAFarmers had been contacted by the Anti-Dumping Commission regarding the impacts of the tariff on farming businesses,” a spokesperson said.
“Given the tariff will result in additional costs for farmers, WAFarmers considers the lack of communication by the Anti-Dumping Commission to industry to be concerning.”
The ADC said it based its review findings and recommendations on information provided by Nufarm and submissions received from chemicals importer Agrichem Manufacturing Industries Pty Ltd and exporter Rainbow.
It also looked at the Australian Border Force (ABF) import database and “financial data” from the Australian chemicals industry between July 1, 2014, and June 30, 2017.
It said it sent “questionnaires” to two 2,4-D importers identified from ABF data and posted the questionnaire on its website, but did not directly contact other chemical importers.
Its report acknowledged about 15 companies, apart from Nufarm, produce or market herbicides in Australia manufactured from imported 2,4-D.
It also sent questionnaires to five Chinese companies which export 2,4-D to customers in Australia.
Only Rainbow responded and the ADC said it considered the others “unco-operative exporters”.
It estimated Nufarm, which produces 2,4-D acid from a chemical reaction involving chlorine, phenol, sodium monochloracetate acid and hydrochloric acid at its Laverton North manufacturing facility near Melbourne, Victoria, had 60pc of the Australian 2,4-D herbicide market.
Competitor companies formulating agricultural herbicides from imported 2,4-D supplied about 40pc of the Australian market and 80pc of that imported 2,4-D came from China, it said.
The rest is mainly from India and Poland.
Australia’s 2,4-D market size increased by 85pc since 2014 but the growth of imported 2,4-D volumes outstripped market growth, particularly during last financial year when “dumping” occurred, the ADC said.
As the major producer of 2,4-D herbicides in Australia, Nufarm was concerned any lapse in anti-dumping measures would potentially damage its market share, profits and profitability through prices being depressed by increasing volumes of cheaper imported 2,4-D, the ADC said in its report.
“Significant surplus capacity exists in the Chinese 2,4-D manufacturing sector which is likely to be a motivator to price goods at dumped levels in order to secure an increasing share of the Australian market,” it said.
“As a result, the commission considers that, if the anti-dumping measures are not continued, the dumping of 2,4-D from China is likely to continue or reoccur.”
Nufarm Australia New Zealand regional general manager Peter O’Keeffe said it made its application following analysis of import data indicating Chinese exporters had continued to dump 2,4-D product on the Australian market.
“Nufarm firmly believes that dumping is unsustainable and in the medium to long-term would impact farmers through increased costs and reduced reliability of supply,” Mr O’Keeffe said.
He said it was critical the local industry was protected from dumped product.
“History has demonstrated across a range of industries that if local manufacturing does not survive because competing products are imported and sold at ‘dumped’ prices then ultimately prices rise and consumers suffer in the long run,” Mr O’Keeffe said.
He played down fears of a price rise in 2,4-D products at a retail level.
“Australian growers have the choice of 2,4-D product originating from more than 20 countries including Europe, India, China and United States, with China the only country subject to these measures,” he said.