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  • New Zealand sheep farming has been heavily influenced by fluctuations in demand and returns for meat and wool. Discover what other factors have contributed to this industry since the first sheep arrived in New Zealand.

    Since the beginning of European settlement, New Zealand’s production and export of agricultural products has been a major source of income. This situation has changed over time in response to new technologies, increasing scientific knowledge and changing societal influences.

    Early sheep farming in New Zealand

    The first sheep arrived in New Zealand in 1773, and by 1850, sheep farming was firmly established in the South Island where fine wool sheep suited the climate. Wool was ideal for export because it was easy to store and ship and there was strong overseas demand due to an expanding textile industry.

    Farming in the North Island was slower to establish because of Māori land ownership and expansive areas of bush, which were expensive to clear. By 1900, the government had acquired 3.15 million acres of this land and made it available to European settlers. After this, mutton and wool became the main source of income for sheep farmers in the North Island.

    Railway expands and refrigerated meat exports begin

    The first public railway in New Zealand opened in Christchurch in 1863. By 1879, there were 1,282.5 kilometres of line in the South Island, including the main trunk line from Lyttelton to Bluff. The expansion of the railways made it possible to transport meat efficiently. New Zealand’s first freezing company was established in Otago in 1881, and the first shipment of refrigerated meat went to London in 1882. Refrigeration also opened up an export market for dairy products.

    Growth of the dairy industry

    Dairy cooperatives were formed in the 1880s to pool capital so dairy factories could be developed. By 1890, dairy products were contributing a growing proportion of New Zealand’s export income, and by the turn of the century, the expanding dairy industry with regular milk payouts became financially more attractive than sheep farming.

    Research organisations help productivity

    The government played an active role in the development of farming from the beginning of European settlement. They established the New Zealand Department of Agriculture in 1892 to control quality of export products and conduct research. In 1926, the Department of Scientific and Industrial Research (DSIR) was established to improve agriculture production, and in 1928, the first plant research station was set up. Improving pasture was one way of increasing productivity.

    Aerial topdressing provides efficient fertilisation

    Commercial aerial top dressing began for spreading superphosphate fertiliser in 1949, helping productivity. The same system was used for spreading poisoned bait to help control rabbit numbers.

    Post-war boom

    Overseas economies grew after World War II, bringing rising demand and prices for New Zealand agricultural products. This was a boom time for farmers – they had more money for fertiliser and new machinery and there was increasing technological innovation and scientific agricultural research, increased stock numbers and improved productivity. By 1960, wool made up one-third of the New Zealand’s export income.

    Declining demand for wool

    Wool prices fell dramatically between 1966 and 1967, marking the beginning of a gradual decline continuing to the present. Wool faced competition from a growing synthetic fibre market and changing consumer demands.

    In 1973, the first international oil shock increased the cost of fuel, adding more production costs for farmers.

    Government subsidies short-term fix

    In 1977, the government introduced subsidies and guaranteed farmers minimum prices for their products despite declining value. Subsequently, stock numbers increased and exports grew.

    This all changed in 1984 when a new Labour government began removing minimum prices and subsidies. After this, returns for lambs, including wool and pelts, fell by 50% and sheep numbers fell dramatically.

    Performance-based selection

    Falling returns for sheep farmers also influenced a shift away from selecting based on breed alone to performance-based selection. This involved selecting for particular traits of most value to them at the time, such as wool weight, fertility and lamb growth rates. When geneticists started measuring the heritability of different traits, they could give farmers guidelines for improving productivity. This led to new breeds such as Perendale, Drysdale and Coopworth, developed for particular environments.

    The National Flock Recording Scheme (NFRS) was launched in New Zealand in 1967 to provide a genetic database of breeding values and other genetic information to help breeders and ram buyers select more productive sheep. By the early 1980s, half a million ewes were having their performance recorded annually. Since 2002, Sheep Improvement Limited (SIL) has controlled this recording system. Sheep breeders’ ongoing commitment to performance recording has contributed significantly to genetic improvement of New Zealand sheep since recording began.

    Responding to ongoing challenges

    Wool continues to face competition from synthetic fabrics and changing consumer demands, and returns for wool have remained low. Since the downturn, some farmers have experimented with farming other animals such as deer, goats, alpacas and llamas for meat and fibre. Some farmers have changed to dairy farming, which has been a more profitable enterprise since the 1980s.

    Farmers have also moved into innovative areas. For example, in 2014 there were 4 sheep milking companies in New Zealand. By 2018, the number had grown to 16 producers. Sheep milk is used for cheese, yoghurt, infant formula and other nutritional products.

    Time magazine called the Wool Runner 'the world's most comfortable shoe' in 2016. This world-first wollen running shoe uses fabrics designed by AgResearch scientists.

    Wool is a natural fibre with many unique and useful properties. Research and development is now leading to new wool fabrics that have advantages over synthetics. Could this change the demand for wool again in the future?

    Find out more about recent innovations in wool textiles and why the fibre properties of wool make it such a valuable material.

    Useful link

    Find out more about New Zealand sheep breeds and their origins on the New Zealand Sheep Breeders Association website.

      Published 18 July 2010, Updated 14 March 2018 Referencing Hub articles
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