China's farming heritage to stem agri trade deficit with NZ

The tide of agricultural exports from New Zealand to China could begin to balance out under a new bilateral agreement to promote agricultural cooperation, the head of New Zealand's farming industry body told Xinhua Tuesday.

The Strategic Plan on Promoting Agricultural Cooperation signed by the two countries' agriculture ministers last week was an " historic" agreement given it came the same week as figures showing China had emerged as New Zealand's largest trading partner in the quarter to March, said Federated Farmers president Bruce Wills.

The agreement to share knowledge and expertise would prove invaluable to New Zealand despite its current position as a world leader in agricultural production, Wills said in a phone interview.

"We can't assume we know all there is to know about agriculture and we can't assume we're world leaders in everything. There's a lot of stuff the Chinese do that might become relevant to New Zealand in time," he said.

Citing the example of the Chinese gooseberry, which New Zealand farmers developed and marketed as the "kiwifruit," Wills said China had much to offer after developing agriculture over thousands of years and on terrain stretching from snow-clad mountains to desert regions.

"Dryland rice is one product that could be beneficial to New Zealand. We don't grow rice here at the moment, but with the onset of global warming, warmer and dryer areas might struggle with traditional pastoral farming," said Wills.

"There's no question that in time New Zealand will have to look at other opportunities."

PGG Wrightson, New Zealand's largest agricultural services and a leading seed development company, which is controlled by China- based Agria Corporation, could also end up exporting back to New Zealand as it stepped up research and development in China.

"We may need to be buying seed back. It's a bit arrogant to assume we can keep being world leaders," he said.

New Zealand agriculture exports to China had been "booming along" since the signing of a bilateral free trade agreement in 2008.

Last week, Statistics New Zealand announced China had overtaken Australia in the March quarter to become New Zealand's biggest trade partner, with exports to China up 47 percent, or 278 million NZ dollars (237.95 million U.S. dollars), on the previous quarter, led by sales of meat, milk powder and pine logs.

The cooperation agreement was "recognition that China is a vitally important market that we've got to keep growing."

"It's our largest lamb market by volume; it's our biggest wool market; it's our biggest forestry market; and it's certainly a very significant and growing exponentially dairy market for us," said Wills.

International concerns over the discovery of traces of Dicyandiamide (DCD), a pasture treatment chemical, in New Zealand dairy products in January had highlighted the fragility of the market and the need for New Zealand producers to better understand it, he said.

Chinese companies are stepping up investment in New Zealand's agriculture sector with Guangdong-based Yashili International Holdings and Inner Mongolia's Yili Industrial Group last month announcing they had received approval from New Zealand's Overseas Investment Office (OIO), which considers all foreign investments of at least 100 million NZ dollars, for major projects.

Yashili is to invest 230 million NZ dollars in building a milk processing plant just south of Auckland, while Yili is buying New Zealand's Oceania Dairy, which has plans to build an infant formula processing plant in the South Island's Canterbury region.

Other Chinese investors in New Zealand's dairy sector include Shanghai-based Bright Dairy, which purchased a 51-percent stake in the Synlait Milk processing firm in 2010, and Shanghai Pengxin, which fought a long and bitter court battle last year to purchase 16 North Island dairy farms. (One U.S. dollar equals 1.17 NZ dollars)