Landcorp considers business case for milking sheep

Landcorp, New Zealand’s largest corporate farmer, is having a serious look at milking sheep and will decide in a few months whether there is a business case for it.

Chief executive Steven Carden, who is about one year in the job, says the board gave him a broad mandate to look expansively at opportunities and milking sheep is one he has come up with.

Landcorp has a flock of about 850,000 ewes, none of which it milks, but it leases about 1,500 to Invercargill-based Blue River Dairy, an existing processor of sheep milk.

“Landcorp has been a very successful sheep farmer for many years,” Carden said. At present the state-owned company produces wool and meat but sees an opportunity in the sheep milk industry where there is no real international player. Sheep milk consumer products are established in many countries but they are largely produced domestically.

Landcorp started seriously examining opportunities in the sheep milk industry about four to five months ago.

“We are still doing a business case on entering what would effectively be a new industry for us. We would like to make a decision on it in the next three to four months,” Carden said.

The bottleneck for any sheep milk industry is getting the right sheep breeds, developing ways of increasing their output and building up large flocks of them.

“Until we’ve cracked that issue the industry will be on a slow growth path,” he said.

But Landcorp has a significant genetics business and the ability to apply that to breeding sheep for milking.

“We are really interested in sheep milk because it provides another income stream for sheep farmers who are struggling with the economics of their farming operation compared to dairy farming,” Carden said.

A sheep milk industry would have a smaller environmental footprint than the bovine dairy industry and the capital costs per farm would not be substantial.

To go ahead with sheep milking Landcorp would want a processing partner and it would examine opportunities for developing a high-end brand, Carden said. It is open to investing in processing and is open to talking to foreign companies.

Landcorp has farms in Te Anau which could potentially supply the existing processor in the region. The company hasn’t decided what products the venture would focus on but options include butter to high-end retailers in the US or infant formula to China.

There may be an “external group to New Zealand” willing to come in with expertise but there hasn’t been any talks yet, he said, adding that Landcorp had a lot of positive feedback since it had revealed it was considering milking sheep.

“It is a consumer product around the world but very little is traded internationally,” he said.

Sheep milk tastes similar to milk from cows but has a higher solids component so is more efficient to process.

“We would like to take a product through to end consumer in partnership with others,” Carden said.

(BusinessDesk)