Although dairy sheep farming has been underway for some years in New Zealand, it has only recently started attracting a higher profile, principally through the efforts of Landcorp with their Spring Sheep brand, and Waituhi Kuratau Trust, the Turangi-based Maori land trust and their Maui Milk brand.
The dairy sheep industry in NZ is a relatively recent phenomenon. The five main producers of sheep milk are:
- Blue River Dairy, in Southland
- Kingsmeade, in Wairarapa
- Thorvald, in Nelson
- Maui Milk, near Turangi, and
- Spring Sheep, near Reporoa.
Interestingly, although the industry is in its infancy in New Zealand, Blue River Dairy, which milks over 10,000 sheep, is one of the largest sheep dairies in the world. However, the industry has some way to go to build national infrastructure, develop quality standards, establish national industry bodies and support organisations, and importantly, improve genetics to increase productivity. New Zealand’s depth of experience in sheep farming and dairy farming should help hasten this process.
Dairy sheep organisations Maui Milk and Spring Sheep will be looking for dairy sheep suppliers, but are both working through a development period over the next two years to increase milk yield through improving genetics and management to create a high-performance NZ dairy sheep breed.
Sheep milk is highly nutritious and is richer in vitamins A, B and E, calcium, phosphorus, potassium, and magnesium than cows’ milk. Sheep milk has a higher solids content than goat or cow milk. As a result, more cheese can be produced from a litre of sheep milk than a litre of goat or cow milk. Sheep milk yields 18 to 25 percent cheese, whereas goat and cow milk only yield 9 to 10 percent.
Sheep milk products include cheeses, yoghurt, ice cream, milk powder and fresh milk. Other income, from milk-fed lambs, meat, wool and leather, is also possible. Small-scale dairy sheep milking is also an option to produce milk, cheeses, and yoghurt for local markets.
Worldwide production of sheep milk in 2014 was approximately 10.5 million tonnes and is growing at around 2.5 percent per year. The largest producers of sheep milk globally in 2014 were China with 1.5 million tonnes (14.7 percent), Turkey (10.7 percent), Greece (7.4 percent), Syria (6.6 percent) and Romania (6.5 percent).
Key markets are China, Taiwan and other Asian countries, although the world’s biggest market for sheep cheese is the US.
 Business Plan for the NZ Sheep Dairy Industry – Lucy Griffiths (2014)
 FAOSTAT – Food and Agriculture Organisation of the United Nations
Dairy sheep farming would be similar to a dairy cow farming regime, with sheep being milked twice daily.
Grass-feeding sheep is considered not only a sales benefit for customers, but also to maintain a highly cost-efficient industry. However, developing a high-performance dairy sheep breed using European genetics may necessitate a need for indoor housing in the future.
There is some evidence that housing sheep closer to the dairy shed increases productivity compared to sheep walking long distances.
Dairy sheep yield is currently around 150–200 litres per ewe per season. The aim is to increase this to at least 300 litres per ewe and more to become internationally competitive. Lactation is currently 180–200 days, compared to cows at 280–300 days.
Infrastructure required will be influenced by whether the farm’s existing assets can be used or modified for use, and will depend on the expected value of returns over subsequent years balanced with the necessity for specific asset/s.
Typical infrastructure would include sheep dairy shed (herringbone or rotary), related dairy shed and farm equipment, yards, shearing shed and sheep housing if required.
No published information is available for the cost of a dairy sheep milking parlour, however they are similar in size to a dairy goat parlour and therefore a nominal cost of $10,000 per bail would be appropriate for the installation of a rotary dairy sheep parlour.
The impact of a dairy sheep farm on the environment is considered to be similar to a drystock sheep farm, with N-leaching of around 15–20kg/N/ha, however, more research is required to confirm this.
Most of the Lake Rotorua catchment is ideal for drystock farming and therefore would be ideal for dairy sheep farming.
Developing a Farm Environment Plan from Beef & Lamb NZ  would be a good first step in understanding a farm’s unique resources and how to remain productive while mitigating any environmental and water-quality issues.
Estimated costs and return are speculative at this stage, although costs to the landowner will be reduced if some existing infrastructure can be re-used.
Lucy Griffiths, as part of her 2015 Nuffield New Zealand scholarship, put together a ‘Business Plan for the New Zealand Sheep Dairy Industry’. As part of that project she assembled a financial forecast for a dairy sheep farm based on 2015 figures below. This has been included as a hypothetical example only.
The capital costs, variable costs and gross margin calculations for a flock of 300 East Friesian ewes in the NZ market currently are estimated below. Based on the assumptions outlined, Lucy believes a mid- to high-lactating flock could produce a return on investment within 3–6 years (excluding land costs). A low-lactating flock would lose money.
- Price: $2 per litre at farm gate.
- Lambing %: 175 percent. Assume a 300-ewe flock (525 lambs). Retain 60 ewe lambs for flock replacements. Sell 386 cow milk-fed lambs at $100 (inc 15 percent mortality). If ewe lambs for selling to other sheep milk producers, lamb value increases to $250. Milk-fed lambs 6–8 weeks sold direct to restaurants.
- Wool: current season this is worth $3.30/kg and each ewe has approximately 4 kg.
- Cull ewes: assumed 18 percent culled at $75 per head (average, including mortality) 6 years old+.
- Concentrates: milking ewes: 200 days at 0.5–1.5 kg/head/day; cost $900/tonne. Ewe lamb replacements and artificially reared finished lambs at $85/head x 446.
- Forage costs: additional silage or hay for feeding.
Fixed costs per ewe: labour (paid) $170; power and machinery $52; property costs $30; other $30; Total excluding finance and rent: $282
- 200-day lactation
- Friesian-cross with standard NZ meat breed (low lactation)
- Pure Friesian (average lactation)
- Friesian/Awassi cross (Assaf) (high lactation)
- All ewes close to parlour (24 hectares); ewes housed in evening
- Maintaining flock (20 percent) versus growing flock
- Lambs removed from mother at 24 hours and raised on cow milk powder – $85/10 kg
- Lambs sold as milk-fed lamb direct to restaurants for $100/lamb; 6–8 wk
- Low-lactating ewes fed high-protein TMR mix averaging 500g/day
- Medium-lactating ewes fed high-protein TMR mix averaging 1000g/day
- High-lactating ewes fed high-protein TMR mix averaging 1000g/day
- Demand outstrips supply for breeding stock so ewe lamb prices high at $250 each
- Hogget lambs high cost to purchase at $350 each due to current demand
- Larger farms may have to feed more to compensate for ewes walking further to parlour
- Currently East Friesian lambs – $250
- Hogget (have had 1 lamb) – $350.
Interview with Nick Hammond, Chief Operating Officer, Spring Sheep about their plans and how prospective dairy sheep farmers can get into the industry, RadioLive, Dec 2017
Griffiths, L. Business Plan for the NZ Sheep Dairy Industry, Nuffield New Zealand (2014), (http://nzaginvest.co.nz/wp-content/uploads/2015/10/2014_BUSINESS-PLAN-FOR-THE-NZ-SHEEP-DAIRY-INDUSTRY_Lucy_Griffiths.pdf)
Maui Milk develop world first in sheep milking genetics, Stuff, Jan 2018 (https://www.stuff.co.nz/business/farming/100764165/Maui-Milk-develop-world-first-in-sheep-milking-genetics)
Spring Sheep Milking outlines industry growth strategy, Stuff Dec 2017 (https://www.stuff.co.nz/business/farming/99442729/spring-sheep-milking-outlines-industry-growth-strategy)
Spring Sheep Milking expands with second Waikato farm, Stuff, Oct 2017 (https://www.stuff.co.nz/business/farming/98033620/spring-sheep-milking-expands-with-second-waikato-farm)
Big sheep milk conversion at Taupo, Rural News Group, Jun 2016 (http://www.ruralnewsgroup.co.nz/rural-news/rural-management/big-sheep-milk-conversion-at-taupo)
Growing Sheep Milk Industry, AgResearch media release, Mar 2017 (http://www.agresearch.co.nz/news/growing-sheep-milk-industry-bolstered-by-science/)
Outcome Logic Model Sheep Horizon Three, MPI PGP Programme 2016–2022 (https://www.mpi.govt.nz/funding-and-programmes/primary-growth-partnership/primary-growth-partnership-programmes/sheep-horizon-three)
Peterson, S.W. and Prichard, C. ‘The sheep dairy industry in New Zealand: a review,’ Proceedings of the New Zealand Society of Animal Production 2015. Vol 75: 119-126 (http://www.nzsap.org/system/files/proceedings/73-Peterson.pdf)
‘Chinese Sheep Investment given green light,’ Stuff, Jan 2016 (http://www.stuff.co.nz/business/farming/75730630/chinese-sheep-investment-given-green-light)