Sheep are milked at Blue River's big sheep milking complex at Springhills in central Southlands.

Government owned farmer Landcorp is entering the sheep milking business with 3000 ewes at its Reporoa farm to provide branded milk powder and ice cream for mostly Asian markets.

Most of the sheep milk produced on a 4000 hectare farm in the Spring Sheep Dairy (SSD) joint venture with the agribusiness investment company SLC Group will be processed by an independent Hamilton processor. Milking of 3000 east friesian ewes will begin in a 120 stall herringbone shed in September.

Milk produced in the shoulder periods of early September and autumn will be made into ice cream for domestic and export markets. The first whole milk powder, initially to go to Taiwan and Korea, will be sold in March with nutritional and luxury brands to be developed over the next six months.

DAVID UNWIN/FAIRFAX NZ Sheep milk.

SSD chief executive Scottie Chapman said the long term goal was to export high value sheep milk products to Asian consumers.

He said the partners kept coming back to sheep milk after looking at added value alternatives to sheep farming such as collagen and nutraceuticals.

They had yet to milk their first sheep and were taking a long term view, but the opportunities were exciting, he said.

"We are creating an Asian fast moving consumer goods company with a branded product. We will be selling finished products for consumers and we will own the brand."

Chapman said the company would keep the brand operation as simple as possible by initially concentrating on whole milk powder and ice-cream.

This would be extended by the fifth year with senior and sport nutritional products. More options would be explored for Asian markets.

Chapman said Taiwan and Korea were mature markets which appreciated quality, understood food and had a long partnership with New Zealand.

They were unlikely to look at the China infant formula market because they were not in the ingredients game or cheese as it was mainly a European product, he said.

Sheep milk had 18 to 19 per cent milk solids compared with dairy cows' 10 to 12 per cent, a creamier texture and was easier to digest than cow milk which was a major issue for Asian consumers, he said.

It's high calcium content would appeal to Asian consumers susceptible to osteoporosis and it had high protein levels and was more nutrient rich than other milks.

Sheep milk generated US$8 billion (NZ$11.3b) in revenue internationally but only US$650 million in exports with most consumed within sheep milk producing nations.

Chapman said no value would be lost from the milking flock with income continuing to come from wool and sheepmeat.

Most of the ewes were three quarters east friesian with the flock to be heavily culled to produce high milkers, he said.

Within its five year plan the operation will be extended to another farm near the Reporoa operation.

Landcorp chief executive Steven Carden said the company was well-placed to make a go of the new venture.

"Landcorp has the scale to create a thriving sheep milk business. We have a lot of experience farming sheep, a successful sheep genetics business, the country's largest dairy cow herd and a network of innovative farms throughout New Zealand."

Landcorp - the country's largest farmer - has been working to refocus its products in niche customer and consumer markets. Massey University's Riddet Institute was brought in to experiment with sheep milk in butter, yoghurt and ice creams.

The Reporoa farm will produce about one million litres of milk and will become the sixth sheep milking operation in New Zealand.