Sheep Dairy Industry's Potential

New Zealand has a very small sheep dairy industry but, surprisingly, its most successful member has one of the largest dairy flocks in the world – Antara Ag Farms (formerly Blue River Dairy) in Southland, which produces a variety of sheep milk cheeses and powder from around 16,000 ewes. Smaller players include Kingsmeade Artisan Cheese in the Wairarapa, Origin Earth in the Hawkes Bay, Neudorf Dairy near Nelson, and the Waituhi Kuratau Trust in the Taupo area. Significantly, Landcorp plans to be milking around 2500 ewes this spring, also in the Taupo area.

Interest in sheep dairying has been around since at least the 1970s. At various times, useful research has been done into farm production issues but marketing efforts have had only limited success until this century, according to Dr Craig Prichard of Massey University’s Business School. “Over the last 20 years the market has changed and our interest in fetas and the soft cheeses has shifted dramatically. This is a global phenomenon,” says Craig.

“A second factor is the way the Chinese have embraced high-end Western foods, especially cheeses. This is a signal that the New Zealand industry might now move from being very fringe to something much more mainstream.”

“In February this year we ran a two-day conference for the sheep dairy industry with 157 people attending. One speaker, a food buyer from Shanghai, said that she had been buying 120 tonnes of cheese annually from Blue River Dairy and she wanted more. That was an interesting moment for everyone in the room and for the industry in general.”

The speakers’ comments supported the findings of Lucy Griffiths, a marketing consultant with expertise in international marketing and experience with marketing sheep milk cheeses. Last year she won a Nuffield Scholarship to study sheep dairy industries in six countries and the marketing of their products.

“I looked at best practice sheep dairy operators in each country, and in each one they were experiencing a growth in demand of between 10 and 20% annually. Some of this is because of the increasing demand for specialty cheeses, yoghurts, ice creams etc with subtle flavour differences, and also because lactose intolerant people are generally able to digest sheep milk,” says Lucy.

“In Switzerland they produce luxury products and have the highest farm gate sheep milk prices in the world. It was interesting that one of their large dairy companies had bought a Dutch sheep milk powder company, and I wonder if this is a pointer for the New Zealand conventional dairy industry.”

“Italy has many organic sheep milk farmers, and while their production levels per animal are low, they focus on what the animals eat and how it affects the taste and quality of the cheeses they export mainly to the USA.”

“In the UK, the three farms I visited yielded over 600 L annually per ewe, and demand is growing 20% per annum for yoghurts going into supermarkets. There is also huge demand for locally made sheep cheeses”.

“The most efficient industry I saw was in Israel where the stock are all housed, have three lambings every two years and produce over 600L from assaf ewes that are all electronically identified. They use milk meters and record animal production and breeding data from birth to death. Most other countries comprised mainly small operators that did not invest the capital to create these sorts of efficiencies through monitoring and measuring.”

“France is more traditional with 1700 farmers supplying Roquefort cheese, including some family farms having produced since the late 1700s. I was told that demand for Roquefort was decreasing (although it still commands a very high price) and tastes are moving away from very strong blue cheese to more subtle flavours.”

“In the USA there are over 100 sheep dairy farmers producing milk for artisan cheese makers, but only three of them have over 1000 ewes.”

Lucy believes that New Zealand has the ability to produce premium products on a large scale, as Blue River Dairy is already doing. She has identified critical areas to address that include increasing the flock using the best available genetics and techniques like embryo transfers and artificial insemination; education and training in sheep dairying; the formation of an industry association to represent and provide information to farmers and processors; and rigorous science to back up claims made by the industry.

Two areas for research are milk composition to identify any components that are unique or that may have special value for nutrition and health, and measuring the industry’s environmental footprint which is thought to be less than conventional dairying.

“We also need to develop markets offshore for infant milk powder, health and nutraceuticals into Asia, luxury and sports nutrition foods into the USA, and establish “New Zealand natural” sheep milk, ice cream, butter, pasteurised milk, ricotta and yoghurt,” says Lucy.

“I think in ten years the industry could be milking 1 million sheep and have a turnover of $1 billion.”

That figure is rather more ambitious than the aim of a six-year government/industry research programme that talks of “enabling the emerging dairy sheep industry to reach exports of $200 million by 2030”.

Dr Linda Samuelsson, the AgResearch scientist managing the programme, says it includes four main areas of research:

• Milk composition to determine nutritive value and special components that could have health benefits. No work has been done on the detailed composition of NZ sheep milk, which could be different to other countries’.
• Testing identified components to see if they have specific health benefits, and developing new products from them.
• Design of feeding systems that increase the net volume of harvested milk and maximise desirable components; improve sheep nutrition and health outcomes over the whole lifespan of the animal; and allow weaning as early as possible without affecting performance in later life.
• Determining the environmental footprint of farms so that any statements about sheep dairying in NZ are based on hard data. Quality Assurance guidelines will be produced to ensure the sustainable reputation of NZ dairy sheep products.

Linda says that the programme is being funded by the Ministry of Innovation & Employment, Kingsmeade Artisan Cheese, Antara Ag Farms (formerly Blue River Dairy) and the Waituhi Kuritau Trust.

“Currently we are collecting whole milk samples at Kingsmeade and Blue River to see how composition varies throughout lactation. We are also collecting effluent samples to look at what is in the effluent in terms of nutrients and bacteria, and how that varies throughout the year,” she says.

“We are also doing on-farm studies with Blue River Dairy looking at early weaning of lambs and the best way to rear hoggets.”

“We already know that in contrast to cows’ milk, sheep milk contains more protein and fat and so has higher milk solids per litre. We will know a lot more once the analyses are carried out after the end of the season. These tests will be done in conjunction with the University of Otago, Victoria University and Callaghan Innovation.”

Marketing remains a critical area that requires much effort and Craig Prichard says that there are two key impediments at present.

“We need to identify much more carefully the key buyers in key markets. Landcorp and its partners will be looking at that in detail, and the budding industry association also hopes to gain funding for some market research,” he says.

“We don’t have any doubts about there being a market, but we need to identify it clearly and determine the best way to engage with it, with some of our best sheep milk products.”

“I think New Zealand has potential to produce fantastic cheeses. People talk about regional variations in sheep milk and I think there is definitely something in that. Kingsmeade Artisan Cheese produces the most amazing blue cheese that I have ever tasted, quite a different flavour to cow’s milk blue cheese. The camemberts and soft cheeses also have huge potential, and we are on the way to developing really good ice cream and yoghurts.”

“There is also a place for sheep milk powder, which Blue River is already producing and Landcorp may also do so when it finishes converting one of its conventional units to sheep dairy production. Landcorp also plans to be working on placing high-end sheep-based foods into Asian markets and to that end they have formed a joint venture with a well-established marketing company, so that is a signal that they see major potential in the industry.”

“At the conference earlier this year we had pretty much the whole industry in one room. At present it is really small but it is interesting how quickly people began to share resources and join forces and form a value chain. I think that augurs well for the industry.”