The resurgent wool industry received further good news when China announced a 5 per cent increase in import quota and changed the way it is allocated.
The executive manager of the Council of Wool Exporters, Nick Nicholson, said the two moves should underpin wool price gains and remove wild price fluctuations.
TradeNegotiations Minister Jim Sutton said China had increased its import quota of wool and wool tops to 337,000 tonnes.
Last year, wool exports to China were worth $166 million and accounted for up to 40 per cent of New Zealand wool exports.
"Access for wool was therefore New Zealand's No 1 priority in our negotiations over China's accession to the World Trade Organisation," said Sutton.
Nicholson said changes to the way the quota was allocated were even more important.
Previously quota was allocated to predetermined parties or companies, meaning it might not be used or needed. That had now been changed to a first-come, first-served basis.
"It is now allocated on the basis of who is doing the business," he said.
But change had been a long time coming, and Nicholson said it was thanks to the efforts of successive Governments and trade negotiations staff, who had worked tirelessly for years to change the system.
China's buying power is such that if it is buying wool, the market rises. If it is not, other buyers sit on their hands knowing the market will fall.
Nicholson said wild market fluctuations had been largely removed in the past two years through the way the Chinese Government managed the quota.
Present price rises for medium and strong fine wool and crossbred wool were due to demand exceeding supply, a scenario which should be in farmers' favour for some time.
"Generally there is a level of cautious optimism and confidence that the market is sustainable for a while," he said.
