China’s appetite for New Zealand dairy products such as butter, cheese and baby formula has grown rapidly in recent years, and many Chinese companies have invested heavily in local farms and factories to secure long term supplies. But while New Zealand is world-famous for the quality of its cow’s milk, the products made from sheep’s milk have also attracted Chinese interest.

It is a rare sight, even in a farming country like New Zealand, sheep being milked to produce some of the world's most expensive dairy products.

“The highest value cheeses in the world, and that’s just the start. You want to try the butter, the ice-cream, and the infant formula,” said sheep farmer Keith Neylon.

Chinese investor, Yuangrong Chen, liked the taste so much he bought New Zealand’s biggest sheep’s milk processing business and wants to export infant formula to the world.

“New Zealand has a resource and environment advantage, and I really have confidence towards the commercialization and globalization of the sheep milk dairy industry,” Chen said.

Chen’s commitment to spend another 40 million New Zealand dollars expanding production also means more jobs.

“This business is at the size where to continue to grow, new investment is critical so that we can increase capacity and production,” Blue River sales manager Gareth Lyness said.

The Chinese investment in sheep’s milk is a welcome economic boost for the Southland region at a time when other commodity prices are falling.

“We can’t just rely on sheep meat and wool and cow’s milk any longer, and this sort of investment allows us to diversify our land use,” said Mayor of Invercargill Tim Shadbolt.

Other Chinese companies have also invested heavily in the South Island. Bright Foods has a 150 million dollar stake in Synlait Milk on the Canterbury Plains, and China’s largest dairy producer, the Yili Group, is pouring more than 600 million dollars into an infant formula factory in South Canterbury.

“What the Chinese want is dairy products that have been grown in a clean, green environment because they know they can sell that notion to Chinese consumers,” said Professor of agri-food systems Keith Woodford.

Chinese investment in the Canterbury Plains dairy industry is not just about production. Another company called Shanghai Pengxin owns a major share in 14 farms, which milk around 13,000 cows for this factory. And more Chinese investment is predicted as New Zealand farm values slump.

“We’re very good at growing the grass, producing the milk and processing it into products, but we do need some overseas capital,” Woodford said.

New Zealand milks 5 million dairy cows but only 25,000 sheep, and Keith Neylon’s vision is to boost that number to ten million milking sheep.

“We can’t feed the world, we’ve got limited assets, but they are good so let’s extract full value from the commodities or the products we produce,” Neylon said.

And it is hoped that China’s long term investment in New Zealand’s dairy industry will benefit both countries.