The free trade agreement (FTA) negotiated with the Gulf Co-operation Council (GCC) is good news for Fonterra, New Zealand dairy farming, and the economy, Fonterra Chairman Sir Henry van der Heyden said.

Fonterra exported NZ$686 million of dairy product to these countries in the year to last May. That was up from NZ$498 million in the 2006-07 year.

Sir Henry said there were exciting opportunities in the region, which has a large population of younger people. In Saudi Arabia, for example, 41 percent of the population is aged 15 years or younger, so dairy products were very important in delivering protein and calcium.

The conclusion of the negotiations represented a significant opportunity for Fonterra in a high-demand region, Sir Henry said.

''While the details have yet to be released, dairy trade currently faces tariffs of five percent and we believe the agreement will allow us to become more competitive and to lift sales further.''

The agreement builds on the gains from FTAs with ASEAN, China, and, most recently, Malaysia. Some 40 percent of Fonterra's exports now go to countries with which New Zealand has established FTAs.