A GROUP of NSW and Queensland farmers are one step closer to selling fresh dairy products in China, as a trial shipment of their Norco milk arrives in Shanghai early next week.
Meanwhile, Western Australia has just signed a deal with Zhejiang province to look at opening up the live cattle trade, and Australian beef exports to China have increased tenfold in the past year.

And there is a chance China could overtake Indonesia as the biggest buyer of Australian wheat within the next 12 months.

All of this has happened without a free trade agreement. So do we even need one?

Absolutely, says Norco’s chief executive Brett Kelly.

“I would love to see an FTA in place,” he told AFR Weekend. “It would certainly help.”

It has taken more than a year for the ­Lismore-based dairy co-operative to clear the administrative and logistical hurdles allowing it to send a trial shipment. And it will probably be another year before it starts sending commercial shipments.

Mr Kelly said achieving access to China’s fast-growing middle class was worth the hassle as Norco looked to reduce its reliance on the big supermarket chains at home.

However, while the business case is strong – a litre of fresh milk sells for $4.25 in Shanghai compared with $1 in Australia – an FTA would greatly improve it.

At the moment in China, Australian products from milk and wine to beef, lobster and abalone attract import duties of about 15%.

Many New Zealand products had those tariffs removed under the FTA it signed with China in 2008, giving its agricultural industry a significant advantage.

After 19 rounds of negotiations without an agreement for Australia, Prime Minister Tony Abbott’s promise to sign an FTA within a year, even if it means some industries missing out, has caught exporters’ attention.

Big prize available

“The potential prize is substantial if wine is in the mix,” says Paul Evans, head of the Winemakers’ Federation of Australia.

The current import duty on Australia’s bottled wine is 14% but after consumption and other taxes the total tax rate rises to 48.2%. Bulk wine attracts an import tariff of 20%.

Source: Financial Review