Analysts are warning opportunities to grow export revenue in the lamb market are in danger if the trend of steadily declining ewe numbers is not turned around.
New Zealand sheep numbers peaked in 1982, with a total of 70.3 million sheep, but the national flock has been declining since then and latest estimates have the heard sitting at 27.3 million
The industry group Beef and Lamb last week released a report with its estimates for the 2018 lamb crop.
It showed farmers are doing well productivity-wise, with more ewes having twins and triplets lifting up lambing percentages to 129 percent, up from 127 percent last year.
But even record lambing percentages have not been enough to offset the rate New Zealand's breeding flock is declining, AgriHQ senior analyst Mel Croad said.
"The report has breeding ewe numbers down by over 2 percent this year, which overall has resulted in a lower lamb crop. B+LNZ have estimated the 2018 lamb crop to be down just under 1 percent this spring to total 23.5 million lambs," Ms Croad said.
The 2018-19 export lamb slaughter was estimated to be 4 percent down on last season, which would make it the lowest export slaughter tally since the 2011-12 season, she said.
"I guess the biggest problem is we're just not seeing any improvement in breeding numbers and we can't keep relying on productivity gains, I think we've got to see some turn-around... increasing ewe numbers," Ms Croad said.
Ms Croad said the sheep industry in Australia was working to do this and by doing so was taking advantage of reports that sheep meat consumption was set to continue to grow globally.
"We don't want to be left behind," she said.
Rabobank animal proteins analyst Blake Holgate agreed while sheep farmers had done a good job increasing productivity to help off-set the decline of the national flock - exports continued to fall.
"We're at a risk of creating inefficiencies here domestically in terms of processing capacity matched up with our supply, and we will want to see that decline come to an end shortly," he said
Mr Holgate said it was an issue very much on the minds of sheep farmers.
"The long-term decline of the flock has been something that's been concerning the industry for a while," Mr Holgate said.