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Dairy farmers hope new Chinese free trade agreement will boost export market growth

Australian dairy farmers are hoping a free trade deal (FTA) with China will help them deal with plummeting milk prices.

An trade agreement is tipped to be signed following Brisbane's G20 summit next month, when China's president Xi Jinping is expected to make a state visit.

Trade negotiations between Australia and China have spanned nine years and Australia's 6,500 dairy farmers are eagerly watching developments after losing out on FTAs with Japan and Korea.

The farmers have been lobbying for a "New Zealand Plus" package which would give them the same conditions their Kiwi counterparts have had since 2008.

Federal Trade Minister Andrew Robb has described this FTA as "the dairy deal" but farmers are cautious.

United Dairyfarmers of Victoria president Tyran Jones said the group had been lobbying politicians about the importance of Australian dairy industry which is worth about $13 billion to the economy.

"It's been really difficult to get a picture of what the other commodities want. Everyone's been playing their cards very close to their chest," Mr Jones said.

For beef, wheat and cotton, and other key export commodities, this could be one of the biggest deals Australia's ever done.

Dairy Australia's trade and industry strategy group manager Charlie McElhone said New Zealand's market share in China had doubled since its agreement, much greater than Australia's 11 per cent annual growth.

Should a similar package be struck it could save $26 million in tariff revenue in the first year alone.

Tariff saving would boost farm infrastructure

Fifth generation farmer Ron Paynter has 400 Holstein cows and produces 2 million litres of milk annually, mainly for the export market at his Ellinbank farm in Victoria's Gippsland region.

He said milk prices have dipped and farmers were often not sure what their income would be due to fluctuating prices.

Under a China-Australia FTA, he said farmers in the region could use the $190 million saved in tariff reductions over 10 years to service debt and reinvest in ageing infrastructure.

"The increased income we'll get from those tariff reductions will flow back on to farm, that'll help us keep the infrastructure current," Mr Paynter said.

"It'll help us put in place better ways of doing things. We can devote more money to environmental sustainability on the farm as well."