The chance discovery of frozen sheep embryos of a breed known for its milking ability is expected to boost the industry in New Zealand.
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In the 1990s Dr Jock Allison, an importer of pure East Friesian sheep, froze 1700 embryos of the breed that he had sourced from Europe.
Maui Milk general manager Peter Gatley found out about the embryos at a sheep milking conference earlier this year, and within weeks they were surgically implanted in a flock of ewes in Hawke's Bay.
Mr Gatley said a new genetic improvement programme had been established using the unique gene pool retained by Dr Allison.
The embryos would allow the company to increase its supply of milk and the females born from the embryos would be milked in 2016, Mr Gatley said.
"We desperately need more milk because the demand is there, and we also need some more efficiency in the business."
Mr Gatley said a partnership had been formed with Waituhi Kuratau Trust, which had been milking sheep on the western shores of Lake Taupo for several years and had been looking for a more reliable direct source of market access.
A Shanghai company that had been marketing sheep milk products for Southland company Blue River, needed an alternative source of supply, which led to the creation of the joint venture Maui Milk, he said.
"Now we're in the process of building milk supply so the milk is being sent up to Hamilton ... and is being packaged into little single use sachets and exported to Shanghai.
"We've got 2500 ewes supplying and we need a lot more than that."
Mr Gatley said milking sheep was a good way for farmers to diversify and meet the environmental regulations in the Taupo and Rotorua regions.