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Making sheep a tri-use animal could ''greatly aid'' the rejuvenation of New Zealand's sheep industry, Federated Farmers meat and fibre vice-chairman Rick Powdrell says.
With Landcorp - the country's largest corporate farmer - eyeing the potential of dairy sheep, the United States could be to New Zealand's sheep industry what China was to dairy cattle, he said.
In a recent speech, Landcorp Farming chief executive Steven Carden outlined the state-owned enterprise's plans, which included exploring farming new products, such as sheep milk.
Mr Powdrell said that news was exciting, when put together with the sheep genome being mapped and a Trans Pacific Partnership ''edging ever closer''.
Nothing less than the full elimination of agricultural tariffs in the TPP was acceptable to Federated Farmers members, he said.
The United States imported about half of the world's sheep cheese last year, and dairy sheep played an important role in the Mediterranean and Middle Eastern countries.
Mr Powdrell said New Zealand had a small but thriving dairy sheep industry. Southland-based Blue River Dairy milks more than 10,000 ewes daily, produces butter, cheese, ice cream, milk powder and infant formula and exports to seven countries. There is also the Matatoki Farm brand in the North Island.
''The United Nations' Food and Agriculture Organisation puts the global share of sheep milk at 1.4% but, in terms of who we are actively trading with, or seeking to develop trade relationships with, the potential is huge,'' Mr Powdrell said.
Sheep milk accounted for 3.9% of milk production in South East Asia, 4.2% in China, and 7.5% in North Africa and the Middle East.
Sheep played a ''significantly bigger'' role than dairy goats in those markets. Sheep's milk contained more solids than cow's milk, hence its popularity for cheese, and it also commanded a premium with consumers as it was more easily digested, Mr Powdrell said.
Given environmental factors, dairy sheep could play an important role in the industry's future and Federated Farmers was very keen to explore that with its members, he said.
• Beef and Lamb New Zealand chief executive Dr Scott Champion stressed the need for comprehensive tariff eliminations in the TPP during a visit to the United States last week.
He met leaders of several major trade and farming associations, including Beef and Lamb's US counterparts, the National Cattlemen's Beef Association and the American Sheep Industry Association, along with state and federal government agencies, members of the US Congress, and US and New Zealand businesses.