Farmers are seeing prices for their lambs fall by 40% or more at sales around the country as meat companies cut payments to avoid the heavy losses they made last season.
The biggest meat firm, Silver Fern Farms, reported a net after tax operating loss of more than $31 million last year.
The largest sheepmeat processor and exporter Alliance Group lost $50 million.
South Island livestock broker Peter Walsh says meat exporters are having to recover their losses but a 40% drop on last year's payments for store and prime lambs is a significant hit for sheep farmers.
He said prices dropped from $7 or $8 per kilogram last year to $4-$5 this year.