Mr. Brendan Crosse:

I thank the committee for inviting Sheep Milk Ireland to attend and providing us with the opportunity to present on how developing a sheep milk industry can make a significant improvement to the viability and resilience of the entire sheep sector.

Sheep production is the second largest farm sector in the country on the basis of farmer numbers and the fact that there are 2.7 million breeding ewes. It plays an important economic, environmental and societal role across Ireland, but particularly in the most rural regions. Sheep farming is the lowest farm system in terms of greenhouse gas emissions.

Despite all of this, the sector is challenged by its economic viability, which is particularly highlighted during the current crisis. This has resulted in poor incomes for farmers and low levels of new entrants. The value of sheep wool has crashed and sheep meat is already a premium meat globally. These are major hurdles for the industry. Having spent countless generations focusing on sheep meat and wool, Ireland must seriously consider the potential of the third product from sheep, which is milk.

Ireland has proven to be a profitable, efficient and sustainable producer of milk. It has a world-class supply chain from its production systems and processing capabilities to its global distribution and marketing. Billions of euro have been invested across all levels of the industry to achieve this. It continues to deliver for farming families around Ireland. However, it is increasingly seen that the dairy cow industry is approaching peak production and reaching its natural limits in Ireland.

Sheep milk production is a major industry across the world and represents 1.5% of global milk production, or 10.5 billion litres. It is a larger industry than the organic dairy industry. Sheep milk is a fascinating product. It has 50% more protein and fat than cow and goat's milk, it is 70% higher in calcium, and it has a unique composition that results in it being suitable for many people, including those who have an intolerance to bovine dairy products. Some 45% of the world's sheep milk is produced around the Mediterranean basin in countries such as Spain, France, Italy, Greece and Turkey. The main outlet for the milk is cheese products such as feta, halloumi, Roquefort, Pecorino and Manchego. There is a growing demand for premium alternative dairy products across the world. The main export markets for sheep milk cheeses are the US, the UK and Germany. These are markets where Ireland is already particularly strong.

Sheep milk production, like all dairy production, faces fundamental production challenges in these Mediterranean regions. These are caused by increased cases of drought, dependence on imported feed, which has seen significant inflation, and traditional production systems, such as hand milking sheep up in the mountains. This has led to reduced production and the consolidation of the sector into high-input indoor systems with a high cost base, leading to increased milk prices. Despite these price rises, demand for the products continues to grow. Currently, Pecorino Romano trades on the Italian Stock Exchange in Milan for €14 per kilogram. This compares with cheddar, which trades at €4.60 per kilogram.

New Zealand recognised the opportunity for sheep milk production. In recent years, it has invested in and co-ordinated the expansion of the industry. Significant research coming from New Zealand shows the economic and environmental opportunities that the industry has in grass-based production systems. Having started from a similar sized base as Ireland, New Zealand sees it as its next billion dollar exporting industry. New Zealand's findings, in a similar production system to Ireland's, show that the income potential for sheep milk production is comparable with dairy cows but with significantly less up-front capital investment, making it feasible for farmers on smaller landholdings.

The environmental benefits are considerable. Sheep milk production, across multiple different production systems, is averaging 40% to 50% less greenhouse gas emissions on a per hectare basis when compared to a Waikato grass-based dairy cow system. New Zealand authorities have also allowed a sheep dairy farm to operate on land that was previously restricted from dairy because it has scientifically proven that the nitrates leaching, and resulting impact on water quality, from sheep milk production is considerably less than it is from bovine dairy. New Zealand has moved past the feasibility stage and is in a period of scaling up and expansion. Major players such as Landcorp, Danone and Blue River are processing sheep milk and focusing on delivering nutritional products, predominately to Asian markets.

Our business was set up to grow the sheep milk industry in Ireland. It is backed by Irish people who understand the fundamentals of this project and the opportunity it represents for rural Ireland. We have set out to enable the growth of the sheep milk industry, which we believe is just waiting to be co-ordinated. We use words such as "enable" and "co-ordinate" because all the major elements of this industry are already in place. Since its establishment in 2017, the business has undertaken significant work to understand, develop and adapt global sheep dairy practices to an Irish context. This work includes: overseas visits to all major European sheep milk-producing countries along with market development visits; importing various dairy sheep breeds; trialling farm production methods, particularly focusing on lamb rearing and dairy sheep nutrition; product development, including the export of milk powder products; and the development of a large dairy flock that represents 80% of the dairy sheep genetics in Ireland today.

Taking lessons from our work, the business is investing in the development of a demonstration farm, which will showcase an efficient farm with top-class rotary parlour and feeding systems. When the demonstration farm is operational, we would like to extend an invitation to committee members to visit it. We will also be having an open day for interested farmers. All work to date has been completed with private funding, with minimal supports from Government agencies. This work has been carried out against the backdrop of significant challenges for any business, not least a start-up, like Covid-19 and the war in Ukraine.

A sheep milk industry in Ireland can develop by working with the family farm model and leveraging off our world-class dairy industry. It can be an efficient farm model, where the lambs are naturally reared by the ewes for 30 days and the milk is collected for the following six months. The shorter milking season will suit farmers on poorer land. The increased output from the farm, compared to dry stock, will allow some farms to reduce livestock numbers, producing more with less.

The current suppliers of sheep milk products face fundamental supply challenges. There is an immediate demand for circa 5,000 metric tonnes of Irish sheep cheese globally, which would equate to approximately 110,000 sheep. This does not include the opportunities on which New Zealand's sheep milk industry is focusing. We have identified a market opportunity with one of Ireland's dairy co-ops and will begin exporting a product in the second half of 2023. We will be importing sheep milk to help us meet export demand and allow for efficient manufacturing. We are recruiting four farmers for 2024 and we have farmers across Ireland contacting us weekly looking to start.

How quickly the Irish sheep milk industry can scale depends on the level of support from the Government. Over the past two years, I have completed a Nuffield scholarship on a project entitled "Creating alternative primary agri-food industries: the feasibility of establishing a sheep milk industry in Ireland." What I found was that growing primary industries was expensive and challenging, they required significant co-ordination between supply and demand, and their supporting infrastructure and research were importance. Being export driven means that we must compete on a global stage from the outset. Ireland has not developed many new primary industries beyond our traditional sectors. The reasons for this must be reviewed.

There is a significant opportunity for the Irish sheep sector to begin sheep milk production at scale. This will improve the viability and resilience of the entire sector. New Zealand has a target of $750 million in exports by 2035. There is no reason Ireland cannot have similar ambitions, particularly with its environmental credentials. The support of the Government is essential for maximum impact. Support for primary agriculture industries is not under the remit of Enterprise Ireland.

We ask that this committee consider the following: a visit to our demonstration farm when it is operational; a request that the Food Vision sheep group, with its stakeholders such as Teagasc and Bord Bia, conduct a brief feasibility study on the potential for sheep milk in Ireland, which we would be happy to support; and a review of the support structures in New Zealand for primary industries, such as the Primary Growth Partnership and Sustainable Food and Fibre Futures, which act as an Enterprise Ireland for innovation at primary level, and the FoodWaikato facility, which is an open access processing facility for dairy and non-dairy products. On the completion of these, we would like to follow up with the committee and its stakeholders to discuss supports to fast-track the development of the industry.

The first 1 million litres are the most the challenging, and the start-up period is when support is most required. After that, the industry will create its own momentum to grow and provide much-needed diversification for farm families.