An agreement that links China's second-biggest beef processor with a Canterbury cattle breeder and an Auckland meat packer and distributor is being hailed as a milestone in China-New Zealand trade relations.

Under the deal, to be signed in Beijing today in the presence of Prime Minister John Key, the Inner Mongolia-based Kerchin Cattle Industry Co will buy the rights to use New Zealand technology.

Angus beef breeder Te Mania Livestock, which has 2500 registered cows in North Canterbury and at Colac, in Victoria, Australia, will supply bull semen to Kerchin's 50,000 hectares of farms that fatten 12,000 cattle a year.

Penrose-based FoodCap, which has developed specialised handling systems for fresh chilled meat and supplies all Woolworths, Foodtown and Countdown supermarkets in the North Island, has a promise from Kerchin to adopt its technology and has hopes of establishing distribution plants in key Chinese cities.

As well as a huge farming operation, Kerchin has also built a big German-designed meatworks that slaughters 100,000 cattle and produces 20,000 tonnes of meat a year.

It was the official supplier of beef to the Beijing Olympics in 2008. In what it terms "food morality", it has instituted strict hygiene standards.

The deal, described by the parties as a strategic co-operation agreement, is the first agriculture deal under the China-New Zealand free trade agreement.

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Source: Jon Morgan, BusinessDay.co.nz, www.stuff.co.nz