As the dairy industry faces environmental pressure and the whims of international prices, interest is picking up in an alternative — milking sheep instead of cows.
There has already been significant investment in new infrastructure — including Maui Milk's new 2000-sheep rotary milking shed near Taupo — and plans are afoot for a $45 million sheep milk drying plant in Hamilton.
Massey University associate professor Craig Prichard says the sheep milk industry is going from strength to strength, from just four farms in 2014 to 16 now.
Prichard estimates that $100m has been invested in the sector over the past two years, mostly around the Taupo-Waikato region.
Nationally, about 20,000 head of sheep are being milked. Products include infant formula, milk powder and cheese.
A recent Sheep Milk NZ conference in Palmerston North — hosted by AgResearch and Massey University — came at a time of growth for the dairy sheep industry, with firms seeking more supply to meet overseas demand.
Prichard, one of the conference organisers, says there has been increased interest in sheep milking as conventional dairy farming faces headwinds in the form of political pressure to reduce its impact on water quality, and from the extreme swings in milk prices.
Dairy farmers have travelled a rocky road over the past few years. Fonterra's farm gate milk price went from a record high of $8.40/kg in 2013-14, to $4.40/kg in 2014-15. It hit $3.90/kg in 2015-16 before recovering to $6.12/kg in 2016-17 and to $6.55/kg for the current season.
Political pressure is also mounting.
The Government says it will undertake a comprehensive review of DIRA — the legislation that acts as a blueprint for the dairy industry — which Agriculture Minister Damien O'Connor says will consider key issues, including the environmental impact.
Preliminary results from an AgResearch study of nitrogen leaching on a farm near Taupo suggests lower nitrogen losses from a grazed dairy sheep system, compared with what would be expected from a typical system grazing dairy cows.
Meanwhile, preliminary Massey University research into comparative environmental impacts using a lifecycle assessment of a case study farm in the Wairarapa showed that sheep dairying offered a considerable reduction in methane emissions compared to cows.
Prichard says the sector is in a growth phase — not just in the number of sheep being milked, but also in the production farmers are getting from their sheep.
His view is that cow-based dairy systems are at the mercy of price volatility, driven by many factors such as US grain prices and European subsidies.
In contrast, he sees more price consistency in sheep milk products because the sector is driven by demand, not supply.
Sheep milking, he says, is a way of diversifying away from the more intensive, cow-based dairy farm model.
"It's a way of speeding up that shift away from 25kg bags of milk powder," he told the Herald. "At the moment we are building an industry that is based on demand for our produce. It is not a supply-driven business.
"[There is] interest out of Asia for some of the products that we are producing — infant formula, adult supplements, certain kinds of liquids, plus high-level cheeses."
Prichard says that based on the current growth rate, there could be as many as 65 sheep milking farms in the Waikato by 2030.
Maui Milk is a joint venture partnership between Waituhu Kuratau Trust and Maui Food Group, a Shanghai-based marketing company.
The venture has two farms on the western shores of Lake Taupo. One has been milking sheep since 2007; the other was converted last year.
Maui milks about 5000 ewes, fed on a diet of lush grass and clover, lucerne and plantain.
The general manager of Maui Milk, Peter Gatley, says there are still people who see sheep milking as a new concept. "But I think that's changing.
"It's reached a level now where most people have heard of it, and they are just opening their eyes to the potential for these relatively new industries such as sheep milk and goats' milk."
He says the "obvious benefit" would be diversification of New Zealand's agricultural exports.
"You are definitely talking a higher value product, a stable farm gate milk price — which is a big plus — [and] you are looking at environmental sustainability," he says.
"But in addition, sheep milk has got a couple of additional benefits — New Zealanders really understand how to farm sheep, and how to produce milk off a grazing system.
"So we are bringing those things together, which separates us from the goats' milk industry, which uses a barn-based model," he says.
Gatley says sheep milking could be an answer for farmers in environmentally sensitive areas.
"There is definitely interest from around Lake Taupo and Lake Rotorua, where there is already dairy cows being pushed away from Lake Rotorua," he says.
Gatley has a background in livestock genetics, having spent more than 20 years at Livestock Improvement. He also co-founded Deer Improvement.
Massey University's Prichard says the relative price stability of sheep milk products is a big drawcard.
"There is a big incentive to get high-value product that is in more consistent alignment between what you are producing and the value that you can extract from it," Prichard says.
"We are not trying to take on the world here — we are trying to do something that will be different for the New Zealand environment that makes use of existing resources."
How it works:
• Can take under an hour to digest, compared to up to four hours for cows' milk.
• An alternative for people who are lactose intolerant. With lower short chain fatty acids that are found naturally in sheep milk, this helps absorption of lactose.
How it stacks up:
• Maui Milk targets a payout level of $17/kg of total solids.
• One ewe producing 300 litres earns $900 in milk, plus some meat and wool income.
• Retail prices can exceed $5/sachet, which equates to $200/kg
• Maui is assessing potential for infant formula, fresh milk exports, and other high-value products.
Used to make:
• Dozens of high-end cheeses, including feta, camembert and curado.
• Sheep milk drinks and yoghurt