2 Jun 2010

Rural sector excited by prospect of Russia FTA

6:05 am on 2 June 2010

The dairy industry hopes trade talks with Russia will lead to more dairy products, in particular milk powder, being exported there.

Russia has agreed to a scoping study with New Zealand officials - the usual precursor to free-trade negotiations.

New Zealand currently exports more than $120 million worth of butter and cheese to Russia, accounting for more than half of all New Zealand exports there.

The Dairy Companies Association says a free-trade deal with Russia could remove trade barriers and tariffs of between 5% - 15% and boost trade there.

Higher meat demand foreseen

Sheep and beef farmers also see significant benefits from a Russian deal.

Over the past five years, the industry has exported about $150 million worth of red meat to Russia, mainly consisting of sheepmeat and beef offals.

But tariffs of up to 15% apply on sheepmeat, while access for New Zealand beef is restricted by quotas.

Meat & Wool New Zealand chairman Mike Petersen says a trade deal, coupled with an improving Russian economy, could push prices and demand for New Zealand meat to new highs.

Zespri too

Zespri is also earmarking Russia as an emerging market with a lot of potential for future growth.

The cooperative says it's already seeing increased sales and profit from free-trade agreements with China and south-east Asia, and there's an opportunity to increase demand for New Zealand kiwifruit in Russia as its economy strengthens.

Kiwifruit is New Zealand's largest horticulture export, with 390,000 tonnes produced last year.

Meanwhile New Zealand textile company representatives are in Moscow this week looking to build a market for woollen products.