A new graduate school specialising in dairy research and innovation will be set up to boost New Zealand's highest-value export industry.

Hamilton-headquartered DairyNZ, Livestock Improvement Corporation and AgResearch, along with Auckland University, have announced the school as a joint initiative.

AgResearch chief executive Dr Tom Richardson said improving the number and calibre of graduates entering the dairy industry would pay huge dividends for the industry and New Zealand Inc.

The Crown research institute currently recruits more than two-thirds of its scientists overseas because of the shortage of local graduates.

"This initiative is a significant move towards redressing that," he said.

DairyNZ chief executive Tim Mackle said the sector needed top-quality graduates, with education and skills that were directly relevant to the industry.

The school will be based at the university's Auckland City campus. Science dean Grant Guilford said its urban base would enable urban-rural issues to be discussed and better understood.

Disciplines will range from those that contribute to sustainable productivity to those that add value beyond the farm gate.

The school is aiming for at least 50 Masters and PhD students by 2015.

- © Fairfax NZ News