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. Photo: supplied
Trouble has hit the fledging sheep-milk industry with one of the country's biggest players telling farmers to stop milking.
Maui Milk sent an email to its 13 Waikato suppliers on Monday afternoon telling them to stop.
Just two years ago Maui Milk was confidently talking of expanding operations - milking about 13,000 specially bred milking sheep.
It had been selling high-end infant formula into the Chinese market through the daigou channel - an informal selling network, but since the Covid-19 pandemic that option was no longer working.
Chief executive Greg Hamill said unfortunately, both the pandemic and the current global economy had been very difficult on 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."
Supplier Allan Browne who farms 1700 ewes near Cambridge in Waikato said the email came as a complete shock.
"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 said he had put six years of investment and breeding into the business so with no prior warning it was pretty 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.
Sheep milk farmers Toni and Allan Browne. Photo: Susan Murray/RNZ
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 backing the sheep milk sector, supporting a project to the tune of $700,000, to support Māori landowners to invest in what it called a rapidly growing industry.
At the time the Minister of Agriculture said the Māori Agribusiness Sheep Milk Collective had ambitious goals to have multiple farms milking about 25,000 sheep and potentially employing more than 100 people by 2030.
Global demand for sheep milk and sheep milk products was booming Damien O'Connor said.
The collective is made up of 20 Māori land trusts and incorporations that own more than 24,000 hectares of land stretching from the western shore of Lake Taupō to the Hauraki Plains.
Meanwhile, the other large sheep-milking company Spring Sheep, which is backed by Pāmu, or Landcorp, said it was working closely with Maui Milk but cannot take on any extra supply this season.
Chief executive Nick Hammond said Spring Sheep has shared learnings with Maui and been in regular contact this week, and will continue to work with them 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 and 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 as being dynamic in that environment is a key element."
Hammond said Spring Sheep was looking outside of China for markets, with a couple already established, and the business would launch into some new ones over the next year, with "some exciting announcements over the next few months".
But he said with milk supply calibrated for this coming season (2024/25) it would be future seasons in terms of bringing over new farmers to the pool.
Spring Sheep has 16 farmers suppliers with 16,000 sheep.