Australia's top dairy farmer says the federal government should capitalise on New Zealand's milk contamination scandal by finally signing a free trade agreement with China.
Beijing has banned products from the world's biggest dairy exporter and New Zealand's main milk processor, Fonterra, after it was discovered earlier this month that some of the company's products contained bacteria that could cause botulism.
Australian Dairy Farmers president Noel Campbell said no Australian products have been affected and the government should accelerate its FTA negotiations with China, which have been running for more than eight years.
"It is a real opportunity for us because ... close to 50 per cent of the dairy products that go into China are from New Zealand, whereas we've only got about 5 per cent, so we have got 10 per cent of what they send in," he said.
Mr Campbell said New Zealand's advantage over Australia was predicted to grow.
He said entering a FTA with China was critical to avoid being left behind.
Australia exported $389 million worth of dairy products to China in 2011-12, compared with New Zealand's $NZ2.1 billion ($1.85 billion).
However, Mr Campbell said it was difficult to extrapolate New Zealand's competitive advantage from those figures alone because it depended on the product mix.
New Zealand entered into a free trade agreement with China in April 2008.
Mr Campbell said he had spoken to representatives from the Department of Foreign Affairs and Trade and Department of Agriculture, Fisheries and Forestry.
From what he was told, he said, Australia was closer than it had ever been to sealing an FTA with China.
"We believe there is significant work being done in that space at the moment, so we are hopeful of what might come out of it. But this Fonterra thing has given us increased impetus, there's no doubt about that."
Trade Minister Richard Marles said in a statement last month he had "stepped up" FTA negotiations when he visited Chinese Commerce Minister Gao Hucheng in Beijing on July 24, two weeks after Prime Minister Kevin Rudd and China's President Xi Jinping agreed to advance talks.
The New Zealand contamination scare was compounded on Friday when a Sri Lankan court also banned Fonterra's products, following a complaint by a health sector trade union that the company's marketing was misleading.
The National Health Services Union said it sought the court ban because Fonterra products suspected of being contaminated with toxic agricultural chemical dicyandiamide (DCD) were still on the market despite an order from the health ministry to recall them.
The health ministry has said tests by Sri Lanka's Industrial Technology Institute found DCD in some Fonterra milk powders and it had ordered their recall.
Fonterra disputed the accuracy of the testing, but said last week it had recalled two batches of its flagship Anchor-branded product in accordance with the ministry directive.