Suppliers in Waikato Instructed to Cease Milking for Maui Milk Sheep Milk due to the Dwindling Demand in the Chinese Market.

RNZ.     1 Mar, 2024 04:48 PM

Image credit: Author with Ai

Maui Milk says an imbalance between supply and demand for New Zealand sheep dairy products has caused it to tell its Waikato suppliers to stop milking.

The emerging sheep-milk industry faces challenges, with one of the nation's major players instructing farmers to halt milking operations. Maui Milk, which operates with 13 Waikato suppliers, issued an email on Monday afternoon advising them to cease milking. Just two years ago, Maui Milk expressed confidence in its growth prospects, with plans for expanding operations, milking approximately 13,000 specially bred milking sheep.

Previously, the company had been distributing premium infant formula to the Chinese market through the daigou channel, an informal sales network. However, due to the challenges posed by the Covid-19 pandemic, this avenue was no longer viable.

Chief Executive Officer Greg Hamill expressed regret that both the pandemic and the prevailing global economic conditions had created hardships for the entire dairy industry.

“Maui Milk is one of many companies being impacted by the imbalance between supply and demand for New Zealand sheep dairy products.

“On Monday the 26th of February we decided to shorten our 2023/24 milking season early and are currently working with our suppliers on options for the 2024/25 season.

Allan Browne, a supplier who operates a farm with 1700 ewes near Cambridge in Waikato, expressed utter surprise upon receiving the email.

“Receiving an email at 4.30 in the afternoon telling us to stop milking and to dry off our sheep immediately was a big shock.

“It’s very awkward, timing-wise because we’re trying to get them pregnant - so starving them to dry them off is not really an option.”Browne mentioned that he had invested six years of effort and resources into the business, making the sudden directive without prior notice particularly devastating.

“We’re a couple months behind getting the milk cheque and there’s still two more months of milk that we’re not going to get into the vat which will have a financial impact.”

The lost income would be close to half a million dollars, he said.

Despite the news, Browne was confident the sheep-milking sector would be okay in future.

“It will prop up again. It was quite a loose funding model at Maui, now hopefully they get a new investor and it carries on.

“The product itself is a great product and it sells well but it never recovered from the Covid pandemic.”

Just two years ago, the government was also supporting the sheep milk sector, allocating $700,000 to a project aimed at assisting Māori landowners to invest in what was described as a rapidly growing industry.

At that time, the Minister of Agriculture highlighted the ambitious goals of the Māori Agribusiness Sheep Milk Collective, which aimed to have multiple farms milking about 25,000 sheep and potentially employing over 100 people by 2030. Damien O'Connor emphasised the booming global demand for sheep milk and sheep milk products.

The collective consists of 20 Māori land trusts and incorporations that collectively own more than 24,000 hectares of land spanning from the western shore of Lake Taupō to the Hauraki Plains.

Meanwhile, the other major sheep-milking company, Spring Sheep, which is supported by Pāmu (Landcorp), stated that it was collaborating closely with Maui Milk but was unable to accommodate any additional supply this season.

CEO Nick Hammond stated that Spring Sheep has exchanged knowledge with Maui Milk and has maintained regular communication throughout the week. He affirmed their commitment to continued collaboration in the future.

“As we’ve indicated to the Maui Milk team though, at such a late stage in the season we’ve already calibrated processing for our customers for our milk commitments so we’re unable to take their last few weeks of milk at extremely short notice.”

“That said, though we see sheep milk as one of the few amazing opportunities in New Zealand where they can build a significant new industry, particularly on the export side and we’ll work closely with Maui over the next period of time and we really hope to see their business flourish in the future,” he said.

Hammond acknowledged this was a tough season for Spring Sheep too.

“We’re a very diversified business. While it’s obvious from what Maui Milk are working through at the moment, there are some areas of the category that are more challenging than others. So we’ve tried to make sure we’ve built a business that has other areas that it can lean into and that’s just the reality of any market, particularly ones growing very quickly, they can also shift quickly, so we see being dynamic in that environment is a key element.”

Hammond mentioned that Spring Sheep was exploring markets beyond China, with some already established and plans to enter new ones within the next year. He teased "some exciting announcements over the next few months."

However, he noted that while milk supply was adjusted for the upcoming season (2024/25), expansion in terms of bringing in new farmers would be focused on future seasons.

Spring Sheep currently collaborates with 16 farmer suppliers, collectively managing 16,000 sheep.