Kia puta ai ki waho - nau mai, E ngā hua o te miraka hipi - Milking the potential of miraka hipi

On a PKW farm in South Taranaki, a special flock of sheep are quietly grazing, unaware that they are the catalyst for an exciting new addition to the Incorporation’s investment portfolio.

Miraka Hipi (sheep dairying) has been growing in potential over the last few years in New Zealand and is now on the cusp of turning into big business. And Warwick Tauwhare-George, Te Rau Matomato/PKW CEO, is making sure that the Incorporation is part of the evolution.

“Sheep dairying has a lot to offer us. In terms of market potential, consumer demand for ovine (sheep) milk outstrips bovine (cow) milk offshore, and domestic demand is growing,” he says.

“Production wise, initial research has shown that sheep dairying reduces environmental impact on the whenua by at least 30%, with continuing studies suggesting it could be as high as 50%.

“This project also holds great potential for building the new partnerships, alternate land use and portfolio diversification we need to continue to build on our success as a business, which aligns with our strategic aims and kaupapa.”

There is a growing awareness of the benefits of drinking sheep’s milk as it is more acceptable to the human digestive system than cow’s or goat’s milk. The taste and smell of sheep’s milk, and sheep’s milk products, is also not as strong as goat’s milk, making it more acceptable to consumers.

It has a high nutritional value, particularly in calcium, which provides elevated health benefits, particularly for the prevention of osteoporosis and for those already suffering from this condition which weakens bones. This is a key consideration when the ageing demographic of the country’s population is considered.

“Strategically, Miraka Hipi aligns closely with our focus on the three P’s - People, Property and Protein,’ Warwick explains. “Leveraging our most valuable asset, our corpus whenua, is an important strategic element for our business, and Miraka Hipi allows us to do that. It also means we can look to repurpose existing whenua, as well as regain corpus whenua over the next 10 years.

“Sheep dairying also has a lot to offer when it comes to People, the most important of the 3 Ps. Following financial modelling and comprehensive consumer market research, we forecast this new investment initiative will create 50 new full-time jobs within PKW Inc over the next 10 years as we scale up production, as well as generate opportunities to build new relationships with local and national investment partners and share the new skill set and knowledge we will develop.”

“In terms of Protein, sheep dairy is closely aligned to the extensive knowledge base and considerable skill set in relation to producing milk protein we already hold within the organisation. While we have extensively researched and explored other protein production channels – for example plant-based opportunities such as hemp or horticulture – these would all require the creation of a new business model for the organisation, and as such represent a greater learning curve for us, as well as an elevated level of commercial risk.

“We expect this new business to offer a return on asset of a minimum of 8% within four years, aligning closely with our core strategy to be a best-in-class corporate investor.

An essential component in PKW’s involvement in Miraka Hipi is partnering with Spring Sheep Milk Co, in which Pāmu (previously Landcorp, and owned by the New Zealand Government) half owns with the SLC marketing company, which specialises in taking New Zealand products to a global market. Founded in 2015, this public-private partnership aims to increase the sector’s contribution to the New Zealand economy by $250 million by 2024. Worldwide, sheep dairying is worth $8 billion at the farm gate and $30 billion at retail.

“Our partnership with the Spring Sheep Milk Company means we have a guaranteed buyer for our milk with a strong balance sheet and the industry experience to deliver success,” says Warwick.

The progression plan for the new business over the next 10 years, will see the PKW flock grow from 1600 ewes at two farms to 13,000 ewes at 12 PKW farms and be the driving force behind the development of a Taranaki hub. This will consist of a further 15 partner farms with another 13,000 ewes (purchased at market rates from PKW) from year three. This means the region’s involvement in the sheep dairying industry will increase to up to 25-26 farms and more than 26,000 ewes by 2032.

This growth also offers significant environmental gains compared to a similar expansion in conventional bovine dairying. A recent study reports that sheep dairying reduces greenhouse emissions by up to four tonnes/ha per annum and reduces water use by up to 200,000 litres per day. Nitrogen is also reduced significantly along with the carbon footprint created in the production process. Studies continue in this space with indications that the environmental benefits of Miraka Hipi could exceed previous expectations quite significantly.

Reduced Environmental Impacts

- Reduction in greenhouse emmisions by up to 4 tonnes/ha per annum

- Reduction in water use by up to 200,000 litres per day

- Significant reduction in nitrogen emissions

- Carbon footprint significantly reduced

The kōrero behind PKW’s decision to diversify into MirakaHipi has been underway for more than three years, with extensive risk profile analysis, financial modelling, industry research, potential partner engagement, market potential and return on asset analysis underpinning the strategic plan.

“As with every business proposal, Miraka Hipi has been subject to robust scrutiny in terms of risk and return, and its alignment to our strategic plan and Te Ara Putanga – our outcomes pathway,” says Warwick. “Our commitment to this exciting new venture will enable PKW to continue to deliver a successfully diversified and sustainable business to our shareholders, providing meaningful opportunity for our people in the years and generations to come.”

This commitment was marked with a kōhatu mouri ceremony in January at Waitokorau, a PKW farm in South Taranaki. To further bring this event to life and accompanying this special feature is our first article in te reo Māori which supports our value of whakapono and the visibility of te reo o Taranaki and our identity as a Taranaki Māori organisation.