AN apparent difference between Western Australia's grain traders and its wine traders dealing into China became clear last week - grain traders sniff the wind, read the signs and react.
Interviewing CBH Group's chief executive officer Jimmy Wilson and chief financial officer Doug Warden after their 2020 annual report was released it became abundantly clear CBH had moved to minimise its risk exposure on barley as soon as it's trade radar picked up China niggles.
Back in November 2018 when China first announced an investigation into alleged dumping of Australian barley, or possibly even earlier, CBH began contingency planning, looking for alternative markets just in case China did what it eventually got around to doing this year.
So when tariffs were imposed in May and CBH barley imports suspended in September, the financial damage was relatively constrained - something less than a $10 million direct hit to CBH and something like $40 a tonne less to WA barley growers - the price differential between malting and feed barley.
It was not the outright disaster it could have been were it not for early awareness of market fragility and contingency planning.
Compare the local grain industry response to that of our wine industry over trade tensions with China.
In 2012 I was working in Margaret River and invited to a civic reception in the then brand new Augusta-Margaret River Shire offices for a visiting Chinese wine delegation.
From memory, the delegation comprised about six or eight older men and women who had spent a day or two in the Swan Valley before starting at Wilyabrup and working their way to Margaret River over about four days, talking through an interpreter to winemakers and inspecting vineyards.
At the back of the reception I discovered a women in her late 20s with a note pad and camera who could speak fluent English.
It turned out she was a writer for a Chinese wine magazine travelling with the delegation and covering it for her publication.
Taken aback, I told her I was surprised there was sufficient support for a dedicated wine magazine in China and that it could afford to send a journalist to WA on a junket.
She explained there was a strong following in China for wines, but the national palate was generally unsophisticated and immature.
An ostentatious bottle and label design was, at that stage of China's wine industry development, much more important than the contents of the bottle, she explained.
I asked if many grapes were grown in China.
Oh yes, she said, much of the north of the country had just been planted to vine, but the first vintage was not expected for five to seven years.
About a week later the Barnett State government, in conjunction with the local wine industry, announced that China was targeted as our next big export market for WA wines.
I remember thinking at the time: "Good luck with that fellas, you've got five to seven years".
Eight years on, our wine industry is surprised and dismayed when China says it no longer wants our wines.
As a footnote: I recently ran into a trader who used to sell wines into China as a sideline for his main export business.
I asked how wine exports were going and related my story of the 2012 wine delegation.
He said he had "given up" on trying to sell premium WA wines in China because the market did not want them.
"Nothing's changed, it's still all about the bottle," he said.
"People turn up for wine tastings chewing gum and they don't take it out of their mouth.
"If they think a wine is not sweet enough, they tip Coca-Cola into it."
Whether it is WA barley or wines, you need to know the market.
