Dairy sheep industry on the rise

Interest in dairy sheep is building throughout New Zealand as corporate farms cement the industry’s footing as a viable alternative to traditional land uses.

Bayleys rural consultant Hayden McCallum said Southland offered significant opportunities for milking sheep, given its well established sheep sector and strong pastoral property base.

It is already home to one of the country’s largest dairy sheep operators, Antara Ag which has an exclusive supply agreement with Blueriver Nutrition HK, milking 15,000 east friesian-poll dorset ewes on three Southland farms.

It manufactures infant formula from sheep’s milk for export to China, the first company in New Zealand to do so.

The Government joined with private enterprise to inject $31.4 million into the growing sheep milk industry. A programme announced on Thursday aims to increase the numbers of farms from the current half dozen to 55, and to lift annual revenues from $7.6m to between $200-$700m by 2020.

The Ministry for Primary Industries has partnered with the Spring Sheep Milk in a Primary Growth Partnership (PGP) programme.

MPI will invest $12.56m (40 per cent), with Spring Sheep Milk investing $18.83m over the six-year life of the programme.

As rural catchments come under stricter controls over farm nutrient losses and management, the ability to convert more land to dairying is being challenged.

Dairy sheep with their relatively low level of nutrient losses offered an optional land use, McCallum said.

However, he cautioned it was still very early days for an industry with a production base of about 33,000 milking sheep.

‘‘But it also appears to be an industry whose time may have come.

‘‘For many sheep farmers seeking a potential succession plan, sheep milking may provide a pathway to helping boost farm returns for the next generation to buy into, without necessarily converting the entire farm.’’

Globally the dairy sheep market is estimated to be worth US$8 billion at the farm gate, a mere 2 per cent of the dairy cow milk market.

However growing markets of increasingly westernised Asian consumers with lower lactose tolerance were drawn to a product that was also more concentrated than cow’s milk.

Sheep’s milk averages 18-19 per cent milksolids, compared to about 12 per cent for cow’s milk.

Returns from the milk were typically about $2 a litre, or $17 a kilogram of milksolids.

Keith Neylon, director of dairy sheep venture Antara Ag in Southland and founder of Blue River Dairy, confirmed his company was poised to expand its sheep milking numbers next year.

The company has grown its genetic base to a point it could offer genetic stock to new farmers, he said.

He likened any supply arrangement to a conventional dairy farmer supply agreement with a processor, receiving monthly payments for milk supplied.

‘‘We have made a point of ensuring our growth has been very much demand led.

It’s not dissimilar to what the dairy goat industry has also experienced.’’

He said the scale a new dairy sheep farmer might want to operate on would depend on their financial position, and how much equity they already had in their property which would enable them to adapt the farm to dairy sheep.