THE signing of the China-Australia Free Trade Agreement could have huge potential benefits for the national sheep and wool industry.
Under the agreement, sheepmeat tariffs of 15 per cent to 23pc will be eliminated over four to eight years, and the 10pc tariff on live sheep will be eliminated over four years.
The potential benefits for the sheepmeat sector could be worth more than $150 million each year by 2024 - with the value over the next 16 years being in excess of $1.8 billion, according to MLA.
For wool, Australia will receive an exclusive Country Specific Quota of 30,000 tonnes clean - or about 43,000t greasy - in addition to its existing WTO quota.
This will grow by 5pc each year to almost 45,000t clean (about 64,300t greasy) by 2024.
China already provides virtually duty-free access on wool under a large WTO tariff rate quota of 287,000t.
Tariffs within this quota are set at just 1pc.
While China has the right to impose a 38pc tariff outside the quota, traditionally it has not done this as wool is an important input in domestic manufacturing.
China takes more than 80pc of Australia's wool, as well as 25pc of our sheepmeat exports and nearly 90pc of sheepskin exports.
Newly-elected Livestock SA president Geoff Power, Orroroo, said there was "no doubt" the FTA would be beneficial for the industry.
"It's going to create a more secure market and by doing that, you're creating more demand," he said.
"And with the more demand we have, hopefully you'll see an upward trend in prices."
Mutton, lamb and wool all had an opportunity to grow under the agreement, he said.
"If growers are getting better returns, they're going to run more stock.
"A lot of mixed farmers put in 1000s of hectares (of crop) each year; if they see a better return in sheepmeat and lamb, they might leave a paddock out or they might sow a paddock of feed rather than just sow a paddock of cereal."
In terms of wool, Mr Power said there was currently an overproduction of fine and superfine wool - "but at the other end of the spectrum, crossbred wools and the more medium end of the Merino market is going pretty well, and the carding market is good".
WoolProducers Australia president Richard Halliday, Bordertown, said the biggest benefit for the wool industry would be the percentage of wool which no longer attracted a tariff over an extended period.
"Potentially, down the track, about 48pc of wool that goes into China will be tariff-free," he said.
"The wool industry has enjoyed a good trade relationship with China for decades. More than 80pc of our wool goes to China.
"The announcement of a 30,000t CSQ for wool in the FTA reflects that there is a positive working relationship between us."
The value of Australian wool exports to China in 2013 was $1.94 billion.
Sheepmeat Council of Australia councillor and immediate past-president Ian McColl said the announcement came after years of hard work to build relationships with the Chinese and improve access to the market.
He said the agreement was required for the Australian sheep industry to be competitive with New Zealand.
"The government worked hard to deliver a beneficial outcome for our meat trade but also for exports of co-products and skins," Mr McColl said.
He said the deal had the potential to lift the baseline price of lamb and mutton and significantly increase the farm-gate returns for producers.
Mr McColl also pointed to economic studies which estimated a phase out of tariffs by 2023 could increase meat prices by between 13-26 cents a kilogram dressed weight (above baseline levels).