Australian farmers Tuesday welcomed a breakthrough which paves the way towards exporting up to one million live cattle to China each year, with the government saying the new market could open up within months.

Agriculture Minister Barnaby Joyce announced late Monday that Australian and Chinese veterinary authorities were formalising an agreement on animal health certification requirements, bringing commercial trade one step closer.

Joyce said the trade, which could begin within months, would start with smaller numbers but it was hoped it would grow to about one million head of cattle being sent each year.

"I could not start with the numbers they wanted, in the past they have asked for a million a year but that is a target that we will build towards," he told Fairfax Media. "We will start in the tens of thousands."

The deal could see Australia potentially earning Aus$1-2 billion (US$740 million-$1.48 billion) each year from exports to the huge Chinese market.

The development was welcomed by the agriculture sector, which earlier this month saw major market Indonesia dramatically slash Australian cattle imports.

Jakarta will import 50,000 cattle between July and September, well below the 250,000 imported in the previous three months.

Brent Finlay, president of the National Farmers Federation, said the breakthrough would mean that Australian producers would soon have more options to sell their cattle overseas.

"The landmark agreement is a significant step towards new trade for Australian feeder and slaughter cattle into China and is testament to our reputation for high quality, safe and sustainable produce," he said.

"Providing Australian cattle producers with a larger range of export destinations positions the industry to better withstand market volatility and increase competitiveness," he added in a statement.

Finlay said the focus would now shift to negotiating the commercial agreements, establishing the Exporter Supply Chain Assurance System arrangements and securing import permits from Chinese officials.

Joyce said the China trade, once finalised, would be the seventh livestock cattle market opened under the conservative government of Prime Minister Tony Abbott after Lebanon, Bahrain, Egypt, Iran, Cambodia and Thailand.

Indonesia is currently the biggest market for Australia's live export trade, which is worth about US$1 billion annually and employs thousands of people.