How we are suckling the sheep-milk industry – Govt invests $7.97m in partnership which involves state-owned Landcorp

Buzz from the Beehive

Damien O’Connor scored twice – he issued one statement as Minister of Trade and another as Minister of Agriculture – while rookie Emergency Relief Minister Kieran McNulty broke his duck, announcing flood relief for the West Coast.

Covid-19 Response Minister Ayesha Verrall put more runs on the board, too, with a statement about Government work to combat new and more dangerous variants of COVID-19.

In his trade job, O’Connor declared he was pleased with the quick progress of the United Kingdom Free Trade Agreement Legislation Bill that was introduced to the House yesterday.

It would  enable New Zealand to implement its obligations under the FTA and was necessary to bring the FTA into force, he explained.

The Bill will align New Zealand’s domestic law with obligations in the FTA, including amendments to the Tariff Act 1988, the Tariff, the Customs and Excise Regulations 1996, the Dairy Industry Restructuring Act 2001, the Overseas Investment Act 2005, the Overseas Investment Regulations 2005, and the Copyright Act 1994. The Bill also creates new regime required to administer a transitional apple export quota.

It has been set down for first reading in the next few weeks before going through Select Committee, with the aim to complete New Zealand ratification processes for entry into force by the end of 2022.

Later this week Damien O’Connor is travelling to Europe to further promote New Zealand’s FTA negotiations with the European Union. He will also visit Canada and Australia.

The United Kingdom Free Trade Agreement Legislation Bill can be read here.

As Agriculture Minister, more contentiously, O’Connor got into the business of investing public money in a primary-industry venture  – or betting on something he and/or his ministry has picked to be a winner.

Point of Order waded through to the end of the statement to learn the Ministry for Primary Industries’ SFF Futures fund will contribute $7.97 million to a $19.94 million programme led by Spring Sheep Co.

The Government (O’Connor says) is boosting its partnership with New Zealand’s dairy sheep sector to help it lift its value and volume and become an established primary industry.

 “Globally, the premium alternative dairy category is growing by about 20 percent a year,” he said.

If it is growing at that pace, does it require government funding?

Then he said:

“With New Zealand food and fibre exports forecast to hit a record $52 billion this year, now is the time to expand the industry and tap into even greater value so we can continue growing our exports.”

Again, we can observe that food and fibre exports reaching $52 million suggests expansion  can happen without public funding.  Nor is it apparent that the state should invest in – or bet on – sheep milk.

O’Connor actually uses the language of the gambler in his next sentence:

 “Through its Sustainable Food and Fibre Futures (SFF Futures) fund, the Government is backing ‘Scale Up’, a new five-year partnership programme with Spring Sheep Milk Co. designed to take the dairy sheep industry from the piloting phase through to an established primary industry.”

A report in Stuff a year ago suggests Spring Sheep Milk is doing nicely, thank you, without needing a government pick-me-up.

Spring Sheep Milk has beaten big global competitors Nestle and China Feihe to win “best infant nutrition” product at the World Dairy Innovation awards.

And then the Stuff report says the sheep milk company, which won the award for its gentle sheep toddler milk drink, a fortified nutritional supplement for one-to-three-year-olds,

is a joint venture between state-owned farmer Landcorp (Pāmu) and food marketer SLC Ventures.

 It started with one farm in 2015 and is now the largest sheep milking group in the Southern Hemisphere with 16 farmer suppliers and 15,024 of its special Zealandia milking sheep.

The venture was scaling up its operations and expected to expand to more than 40,000 sheep by 2025.

Does it need government funding?

Spring Sheep Milk chief executive Scottie Chapman said Spring Sheep was forgoing short-term profits to reinvest to grow the business, gain market share and create a sheep milking industry that was sustainable over the longer term.

He also said Spring Sheep was not targeting to grow to a specific size of the dairy industry, but believed growth would occur naturally through its environmental, animal welfare and consumer advantages

State-owned Pāmu’s initial investment in Spring Sheep was part of a wider strategic drive into non-traditional areas of agriculture, fulfilling its role as a “test bed” for different types of agriculture.

“We recognise that we have the size and scale to try things that smaller farmers cannot, and our support for sheep milking was part of helping create a new pathway and potential diversification option for farmers,” said Pāmu spokesman Simon King. “It has been very successful.”

This isn’t the first time Spring Sheep has been suckled with state funding.

In 2017, in a report on its plans to build a second sheep milking farm on a block of leased land just out of Cambridge, Stuff reported funding was received from the Ministry for Primary Industries’ Primary Growth Partnership (PGP) to grow the value of the sheep milking industry.

And what does the SLC Group do?

Its website says it supports the Food & Beverage and Agribusiness sectors in New Zealand through two distinct methods: active investment and strategic support.

Scottie Chapman is listed as one of two permanent members of the SLC team.

In his press statement today, O’Connor said the Government is backing both established and fledgling primary industries to support our economic recovery.

“This potential industry could be worth more than $750 million in annual export receipts by 2035, which means good things for our farmers and our economic security.

“The investment in ‘Scale Up’ follows a successful six-year pilot programme and complements the recently announced Government funding of $700,000 for the Māori Agribusiness Sheep Milk Collective to support Māori landowners explore the potential of the sheep milk industry in the central North Island.

“Spring Sheep Co. played a key role in growing the dairy sheep industry substantially over the last six years through the Sheep – Horizon Three programme. It now has 12 supply farms in the Waikato, bringing new careers, and boosting the local economy and communities.”

The next stage will involve expanding into the Taranaki region alongside Spring Sheep’s regional partners, Parininihi ki Waitotara (PKW).

The ultimate aim is to have more than 10,000 dairy sheep in the Taranaki region by the end of the programme, producing 750,000 kilograms of milk solids annually.

Several R&D projects are planned for Waikato, Canterbury, Taranaki, and Wairarapa to improve industry understanding of sheep milk and refine best practice standards across the sector.

Read more about the SFF Futures fund here.

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