The New Zealand Sheep Industry Transformation Project (NZSTX)

The aim

The New Zealand Sheep Industry Transformation Project (NZSTX) aims to shift New Zealand sheep production to a 'fit-for-market' model, focused on fine-wool sheep production, where the consumer informs an aligned supply chain right back to the farmer. By removing long-standing barriers to increasing fine-wool sheep production, and using product differentiation and direct supply contracts to generate better grower returns, NZSTX aspires to move New Zealand's sheep industry to fit-for-market fine-wool sheep production.

The challenge

Over the past few decades, profitability in the New Zealand sheep sector has been in decline, with an over-reliance on volatile commodity markets and a lack of product differentiation. This has resulted in a significant drop in the national sheep flock, as farmers have moved to other land uses. Bucking this overall trend, the fine-wool sector is achieving premiums and relative price stability through successful product differentiation and direct supply contracts. The demand from particular international markets for New Zealand fine-wool fibre has begun to outstrip supply, and there is a need to increase production to meet future market demand.  

The solution

The New Zealand Merino Company (NZM) business model forms the foundation of the NZSTX programme's fit-for-market approach. Connections are made throughout the value chain, from the producer to the consumer, linked by long-term contracts. These strong relationships enable direct communication of end-user specifications to the grower, encouraging fit-for-market production and providing the opportunity for premiums to be generated throughout the supply chain.

To assist New Zealand sheep growers to respond to these market signals, NZSTX includes a range of on-farm initiatives to increase New Zealand's production of fine-wool sheep across a range of environments. A combination of ground-breaking research and targeted extension is delivering a suite of tools to New Zealand sheep farmers to enable them to improve production and profitability.

Find out more

• FeetFirst project – NZM production science website
• Our growers – NZM production science website (Perfect Sheep)
• Merino farmers close to solving $10M footrot problem – Stuff website

Outcome Logic Model

• Outcome logic for NZSTX - November 2013

Outcomes to date

• The differentiation of New Zealand fine-wool fibre through NZSTX initiatives has enabled NZM to develop new brand partnerships, while also meeting growing demand for New Zealand fine-wool fibre from established brand partners.
• Work in the digital communication space has assisted brand partners with market positioning of New Zealand fine-wool fibre.
• The NZM fibre supply contract model has been used to facilitate further direct supply contracts for New Zealand fine-wool fibre with leading global brand partners. 
• During 2015-16, NZM and Reda Successori released a $45 million, 5-year, 2,500 tonne contract for 15.8-19.2 micron fibre. Renowned globally for wool suiting fabrics, Reda diversified into activewear with their launch of sports brand Rewoolution in 2012. Superfine New Zealand Merino wool woven by Reda is used in the production of the Allbirds Wool Runners. The Reda contract is the result of a long-standing relationship between Reda, NZM and New Zealand fine-wool growers, and a targeted investment through NZSTX to accelerate Reda’s innovative approach. 
• NZSTX has further enhanced NZM's farm accreditation system, which underpins the credibility of traceable and sustainably produced New Zealand fine-wool fibre, enabling brand partners to meet the increasing consumer demand for these attributes.
• Alongside NZSTX, NZM has begun marketing New Zealand strong wool with a number of early successes acquiring new brand partners and significant grower commitment. This work is strongly aligned with the NZSTX extension strategy, building relationships with strong-wool growers to develop opportunities for encouraging a shift towards more fit-for-market production.
• Through the development of Alpine Origin Merino and the 'SILERE alpine origin merino' brand, Merino meat has been successfully differentiated, both domestically and internationally.
• In collaboration with New Zealand Light Leathers, NZM prototyped Merino leather in the high-end fashion market (as 'Kura New Zealand Alpine Leather'). While this concept showed promise, it is not a commercially scalable prospect at present. 
• The FeetFirst project has delivered a prototype genomic breeding value (gBV) for footrot resistance in fine-wool sheep. The gBV is being further developed (including refinement of the commercialisation pathway) and will be released to the industry during year seven of the NZSTX programme.
• NZSTX has enabled a fine-wool central progeny test (CPT) to be established in New Zealand. As a result, estimated breeding values (EBVs) have been generated across the New Zealand fine-wool sheep flock, and there has been a significant shift in uptake of EBVs amongst New Zealand’s fine-wool ram breeders. The CPT is also playing an important role in the development of the gBV for footrot resistance.
• A nucleus breeding flock has been established through the NZSTX programme, with the objective of developing a new fine-wool sheep genotype (with improved carcass, reproduction and animal health attributes), and a group of seven breeders are continuing the nucleus flock as a commercial entity.
• Research into the impact of ovine Johne's disease, undertaken by the Johne's Disease Research Consortium (JDRC) and co-funded by NZSTX, has delivered improved understanding of the economic proposition for vaccinating fine-wool sheep against the disease.
• Software has been developed for modelling production system comparisons between different sheep genotypes (for example fine-wool versus strong-wool), and has been used in consultations with sheep producers considering the transition from strong-wool to fine-wool sheep production systems.
• Forage trial work done by Lincoln University has increased knowledge about establishing and managing alternative legumes in challenging high country environments. In addition, a forage advisory service supported by NZSTX has accelerated forage development amongst New Zealand's fine-wool sheep producers.
• Research into the impact of mob size and stocking rate on lamb survival, undertaken by Murdoch University and co-funded by NZSTX, is demonstrating the opportunity for fine-wool sheep growers to improve this crucial production driver by changing management practices.
• Newly formed producer discussion groups are proving to be an effective vehicle for extending production science project results, incorporating peer-to-peer learning and hands-on demonstrations.

Audit

• Report on the management of Primary Growth Partnership funding by New Zealand Merino Company Ltd for the period 1 July 2011 to 30 June 2012

Mid-term progress review report

• New Zealand sheep industry transformation PGP programme (March 2014)

Programme Evaluation Reports

• New Zealand sheep industry transformation interim evaluation summary report