Australian wool remains unharmed by trade disputes with China, as the annual wool import quota has increased by five per cent.
The Department of Foreign Affairs and Trade confirmed this week that the Australian wool quota would be lifted from about 36,000 tonnes in 2020 to just over 38,000 tonnes this year.
Annual quota increases are an agreed part of the China Australia Free Trade Agreement and are part of a 50-year relationship between Australian wool growers and Chinese importers.
The quota increase is in stark contrast to the blacklisting of other key Australian exports to China such as barley, wine, coal and timber.
While Australian wool producers are encouraged by the health of their trading relationship with China, they have not been in need of an increased quota.
Drought has affected sheep stock nationally, preventing wool growers from meeting the maximum import amount for some time.
Australian Wool Innovation chief executive Stuart McCullough said Australia’s wool supply had been down for the last couple of years, and so while the quota indicated the health of the trading relationship, farmers would not be able to meet it.
“We don’t read too much into it, we see it as a positive thing we have no indications of any trade tensions,” he said in a statement.
China takes about 90 per cent of Australia’s wool exports – up from 70 per cent about a decade ago.
Unlike a product such as wine which is sold upon arrival, Chinese manufacturers turn unprocessed Australian wool into “made in China” products, half of which are sold domestically, and the other half is exported to the world.
Mr McCullough emphasised the importance of China for Australian wool.
“They are the perfect customer for us right now. They have the population, the climate and the affluence,” he said.
“We are very dependent on China, there is no doubt about it.”
While the US and Europe are buying less wool from Australia because their economies are struggling, China’s business is all the more important, he said.
Wool Producers Australia president Edward Storey said the industry knew the quota increase was coming and didn’t need it, but it was still a good sign of a continuing positive relationship.