Blue River Dairy

March 2016

Blue River Dairy is ready for growth of its sheep dairy products into the Asian market

New Zealand has a very small sheep dairy industry which has been dominated by smaller producers such as Kingsmeade Artisan Cheese in the Wairarapa, Origin Earth in the Hawkes Bay and the Waituhi Kuratau Trust in the Taupo area. The one exception is Blue River which has the largest flock of milking ewes in the country.

Interest in sheep dairying has been around since at least the 1970’s, but marketing efforts have had only limited success until the 2000’s.

In February 2015 Massey ran a two-day conference for the sheep dairy industry with 157 people attending.

A six-year government/industry research programme talks of “enabling the emerging dairy sheep industry to reach exports of $200 million by 2030”.

Significantly, Landcorp, one of the nation’s biggest farmers, plans to be milking around 2500 ewes spring 2015 in the Taupo area. Landcorp started seriously examining opportunities in the sheep milk industry in 2014. One of the attractions of the sheep milk industry for them is that it has a smaller environmental footprint than the bovine dairy industry and the capital costs per farm aren’t thought to be as substantial. 

In late January 2015 local media announced the sale of Blue River Dairy’s Invercargill processing plant and brand to Chinese company Blueriver Nutrition HK. The purchase and the promise of significant capital investment marked a new phase in the development of a company that has its origins going back into the mid-1990’s.

The business was originally owned by five farmer suppliers who were shareholders in a processing plant in Balclutha. In 2004 Southland farmer Keith Neylon bought NZ Dairy Sheep business and formed a new company – Blue River Dairy Products.

The company moved to the former So-Fresh Ice Cream building in Invercargill and started producing a range of high quality sheep milk cheeses to local and international markets including US, Australia and the Middle East.

In 2006 the company entered its cheeses in the NZ Cuisine cheese awards and won a number of medals. The company also started trialing powdered sheep milk products along with ice-cream at the Invercargill plant.

Sheep milk is attractive for many offshore markets. An estimated 50 per cent of Asians are intolerant of cow’s milk. There is a high demand for infant formula, bulk milk powder and cheese, and research is being carried out into other sheep milk products such as pharmaceuticals and cosmetics.

Sheep milk is higher in total solids than cow or goat milk, and is said to contain up to twice as many minerals such as calcium, phosphorus, iron, and zinc. It is also claimed to have more of the percentage of A, E, C, and B complex vitamins than cow’s milk.

Blue River has traditionally converted about 80 per cent of its milk into powder for export.

In August 2015 the plant got its MPI and Chinese (CNCA ) accreditation which means Blue River Dairy has access into the Chinese market. They launched their products there in September.

GM Robert Boekhout is the former quality manager for Blue River and knows the business very well. He says the plant started making cheese well over a decade ago. He points out that the milk is expensive and rather than “playing in the commodity field” they always needed to explore ways to add value. He says the demand is in infant formula and so that’s what they are targeting.

They are producing between 25- 35 tonnes of cheese a year and the balance goes into formula. Robert says the history of the business was topsy-turvey but with Chinese investment and access to the markets their owners provide, they’re looking to move forward with a degree of confidence.

The plant is tiny by Fonterra or Open Country standards. The drier is producing around 150-180kg per hour, compared to the 40 ton per hour drier recently installed at Open Country. Although it is one of the smallest commercial driers in the country, it suits their business and the volume of milking they are receiving. Robert says it is exciting times for the sheep milk industry. “We are doing something different. As Kiwis we like to have a go.”

In May 2014 Blue River had to stop exporting its formula after the China certification and accreditation administration cut the number of permitted imports of infant formula. The company was taken over by Chinese company Blueriver Nutrition HK in February 2015 and it was believed at the time that the sale would open up distribution in China. The company had to lay off about 10 staff following the regulation change, but since it had been bought by Blueriver Nutrition HK there were potentially new jobs on offer, on the back of planned growth and plant expansion during the next few years.

Blue River is currently the only sheep milk infant formula being exported to the Chinese market. Robert says many big companies have to jump over similar hurdles to get their products into China and it was an advantage that the owners were based in China and understood the market. Blue River has since been added to the infant formula milk powder accreditation list along with companies such as Nutricia, Synlait Milk, the Dairy Goat Co-operative, GMP Dairy and Health Pak.

Robert says the Chinese partners are heavily involved in the day to day operation of their business. He says it is challenging for them doing business here as the culture and the red tape make it a very different market in which to operate.

Robert welcomes the split of the business between milk supply and processing because it allows each side to focus on what they do well. He says AntaraAg have things they are working on in terms of sheep genetics, milk volume per ewe, and longer term production increases. On the Blue River side there are also areas that have been identified where they can take opportunities to optimise their processing.

Long term, both parties are looking to grow sheep numbers and supply.

Blue River has recently introduced a sheep milk café and cheese tasting outlet as part of a recent re-opening but cheese making has been part of what the company has been doing for well over a decade.

Cheese maker Wayne (Maxi) Robertson commutes from his Dunedin motel to the Invercargill factory on a regular basis. Max has been making cheese for over 40 years and joined Blue River because he liked the idea of the challenge of working with sheep milk. He says it has a firmer curd and matures much quicker than cow’s cheese. He makes a range of sheep milk cheeses – feta, pecorino, haloumi and a cheddar. He has won many medals including gold and a number of silvers at the 2015 cheese awards.