Interview with Stacey Lee and Nikolai Beilharz, ABC Radio Adelaide

Nikolai Beilharz: Winemakers are seemingly one step closer to seeing the end of those huge tariffs that basically shut down exports to China up to 220 per cent. Those tariffs have been in place for a couple of years now. China's now doing a five-month review to see whether or not it could ditch them.

South Australian Senator Don Farrell joins you now. The Federal Minister for Trade and Tourism. Senator, good morning.

Minister for Trade, Don Farrell: Good morning.

Nikolai Beilharz: Should winemakers be popping the cork?

Minister for Trade: Oh, well, there's a little bit of water to go under the bridge yet, but look, this is very, very good news for Australian winemakers. It's particularly good news for South Australian winemakers. We make 50 per cent of Australia's wine, but of course, we make 80 per cent of Australia's premium wine and it was our premium wine that was so popular in China before the implementation of these impediments.

So, it's very good news for the country generally, but particularly good news for South Australia, and it also means that for those, for instance, bulk wine producers in the Riverland, it's going to give them a brand new – renewed market to sell their terrific products. So, the process is going to take about five months. We'll start that this week, and I'm very confident that based on the result that we got as a result of the agreement over barley, that we'll be very successful here. And prior to the implementation of these impediments, we sold over a million – sorry, billion dollars worth of wine into the China market.

Stacey Lee: Yeah, and we just want to talk about the process from here, Minister. So, you mentioned that there's a – it'll be about five-month process. There's a review that's taking place. What is that review? Who's doing it? Is that on China's behalf and you know, what exactly are they looking at?

Minister for Trade: Yeah, so just like we have a process for dealing with these sorts of disputes, so do the Chinese. As a result of the agreement between the Government and the Chinese Government, that process is starting immediately. Now, we had a World Trade Organization dispute that's been going for a number of years. We would have won that dispute hands down, I don't think there's any doubt about that, but that would have still left us with a couple of years of working through the various appeal processes. What this decision does, it means that we have a guaranteed time frame. It means that wonderful Australian producers like Penfolds, like Seppeltsfield, like Taylor's Wines, can start planning the process of getting their wonderful product back into Chinese supermarket shelves.

Nikolai Beilharz: Okay, so you think that at a business level, that's now what they should be doing. You're that confident that you think Penfolds, for example, should be thinking, right, we've got to get that production going again because it's going to be needed in five months' time.

Minister for Trade: Oh look, I think that's definitely the case, based on everything that's happened. Don't forget, when I first came to this job 18 months ago, Nikolai, we had $20 billion worth of bans on our products as a result of this decision. Once this is implemented, that'll be down to a billion dollars. Still too much, and we've still got more work to do on things like crayfish and a few abattoirs but bit by bit, there's a pattern here, and the pattern is that with our calm, consistent, persistent approach, we're winding back all of these trade bans. And I'm very confident that the process we've now set in place will result in the full resumption of trade with China in the wine market. We know from experience that it's a bit dangerous to put all your eggs into one basket. So, you will have seen over the last twelve months we've negotiated new agreements with the Indians, with the United Kingdom, and next week with the Europeans.

Nikolai Beilharz: Okay, so “don't put all your eggs in the Chinese basket” – the Chinese market basket – is certainly the message that we have heard a lot. It's 7.16 on ABC Radio Adelaide. Nikolai and Stacey with you for breakfast. You're also hearing from South Australian Senator Don Farrell.

Also joining us, Charles Matheson, Grower Engagement Officer for Riverland Wine. Charles, good morning to you.

Charles Matheson: Good morning, Nikolai.

Nikolai Beilharz: How'd you feel when you heard the news?

Charles Matheson: Oh yes, fabulous news and I congratulate Team Watt and Team Farrell for all the work they've done.

Nikolai Beilharz: Okay. What kind of a difference will it make for growers in the Riverland?

Charles Matheson: For the wineries, it's a great start. For the growers, it's a longer-term game plan. There's roughly 1.2 billion litres of red wine in storage in Australia, and last year the Chinese, across all markets, imported 340 million litres. So, assuming that we go back to 25 per cent of their market, which has been in quite serious decline for a number of years, we might be able to import - export to them roughly 100 million litres. So, it's going to take a number of years for China alone to absorb our wine inventory. Obviously, we're exporting to a whole lot of – raft of other countries as well, though.

Stacey Lee: Yeah. So, do you expect the impact to be immediate once the tariffs are lifted?

Charles Matheson: I would expect that there'll be a gradual drawdown of inventories in the wineries, but the impact for growers is going to take some time and we're encouraging growers to do whatever they can to preserve their equity and at least for this year, if possible, rest their vineyards and wait until the impact can be felt.

Stacey Lee:Can you break that down for us a bit, Charles? For people who aren't in the wine growing industry, why are you encouraging them to, sort of –

Nikolai Beilharz: Pause.

Stacey Lee: Yeah.

Charles Matheson: Right at the moment, most wineries have got a lot of wine in their tanks, so they don't have a lot of capacity to grow – sorry, to absorb this current vintage. So, the production is potentially greater than the demand from wineries in the short term.

Nikolai Beilharz: Yeah okay so, the best thing to do is try and minimise that production so that they can actually be taken on by the wineries.

Charles Matheson: That's right.

Nikolai Beilharz: Yeah, gotcha okay.

Stacey Lee: Right, so there's too much in the short term, you think, and you're asking people to sort of pace themselves to – when that demand in the future might actually get here.

Charles Matheson: Exactly.

Stacey Lee: Okay, all right well, Charles, thanks so much for your time this morning. And also thank you to Don Farrell, the federal Minister for Trade and Tourism. If we can. I might just go back to the Minister very briefly, SA Senator Don Farrell.

Minister for Trade: I'll just make one - can I make one other point, Stacey? I live in the Clare Valley, and of course, what we saw last year, was that because of this oversupply issue, a lot of growers simply didn't pick their red wine grapes because their tanks were already full. And so, I think the opportunity now is for people to start thinking if we can get the wine back into China before the next crush next year, then this does give the opportunity to Australian wine producers, particularly those in South Australia, to empty their tanks and get that supply into China.

Stacey Lee:Okay. Now, Minister, before you go, the Prime Minister is heading to China in a fortnight, and I know you've been talking to your counterpart as well. Any mention of Wang Wang and Fu Ni?

Minister for Trade: I'll make sure it's on the list. I'll be meeting with my Chinese trade equivalent. When I met with him last time, he agreed to come to South Australia to try our wines and particularly to the Clare Valley. Why don't I see if we can get him out here, and you can ask him that question directly yourself?

Stacey Lee: Sounds great. Would love to. Let us know how you go, Minister. Thank you.

Minister for Trade: I'll certainly will. Thanks very much Stacey, Nikolai. Thank you.

Stacey Lee: Don Farrell, SA Senator and the Minister for Trade and Tourism.