It’s been a tough few years for sheep farmers and now the drought.  So, the Free Trade Agreement with China would, no doubt, have been welcome news for the meat and wool sector.  China is New Zealand’s most important market for sheep skins, is a large market for sheep meat and is a valuable wool-selling partner.

Meat and Wool New Zealand expects the agreement to potentially double the amount of export meat and skins sent to China, possibly to $300 million.  The benefits for wool could be in securing a guaranteed market.  Under the agreement, China promises to take an initial 25,000 tonnes of New Zealand’s annual exports of 40,000 tonnes and to increase that annually over nine years to 37,000 tonnes.

On the dairy front, Fonterra is now predicting a payout of $7.30 per kilogram of milksolids for the current (2007/08) year.  This is the fourth time Fonterra has lifted its forecast since first predicting $5.53 last May.  Since then international commodity prices have risen sharply due to growing global demand for milk products, particularly skim and wholemilk powders, and cheese.  This payout is expected to flow through into rural centres, and can already be seen in the large number of non-residential building consents for farm buildings.