Sheep & Beef

As of June 2024, New Zealand had 23.6 million sheep and 3.7 million beef cattle. The sheep-to-human ratio has fallen to 4.5:1 — a far cry from the 22:1 peak in 1982 when the national flock exceeded 70 million. Beef cattle numbers have remained relatively stable over the past decade even as sheep numbers have plummeted.

Sheep and beef farming operates primarily on hill country (Land Classes 6-8) that's unsuitable for intensive dairy or cropping. The average farm size is around 650 hectares — much larger than dairy operations — and farms typically run both sheep and cattle as complementary enterprises.

Sheep numbers have been falling for decades, but the decline accelerated sharply from 2017 as carbon forestry conversions took off. Beef + Lamb NZ estimates that 2.6 million stock units have been lost to afforestation since 2017, and that forestry conversions are responsible for 78% of the total reduction in sheep and beef stock numbers over that period.

Other factors include drought, the removal of farm subsidies in the 1980s, low wool prices, and the expansion of dairy farming into traditional sheep country. The 2024 decline moderated somewhat — sheep down only 1%, beef up 4.4% — but breeding ewe numbers continue to fall.

New Zealand is the world's second-largest lamb exporter (after Australia) and a significant beef exporter. The red meat sector generated $10.4 billion in export revenue in 2024 — nearly 20% of NZ's total merchandise exports. Approximately 85% of lamb production and 88% of beef production is exported.

China takes about half of NZ's lamb exports, with the UK/EU remaining important high-value markets. For beef, the US is dominant — particularly for lean trim (grinding beef) used in burgers — driven by tight US domestic supply as the American herd rebuilds.

2025 has delivered record beef prices and strong lamb returns. Beef export values hit an all-time high of $10.85/kg FOB in February-March 2025, driven by tight US supply and strong demand for NZ lean trim. Lamb prices are running 20% above the 5-year average, buoyed by lower global supply and strong UK/EU demand.

Farm profitability remains challenging despite higher prices, as costs have risen sharply. The average farm profit is forecast around $45,200 — highly variable between top and bottom performers. Lower interest rates in late 2024-25 have provided some relief.

Wool — once the backbone of NZ's economy — has become a loss-making byproduct for most sheep farmers. Strong wool (used in carpets) prices have collapsed to around $5/kg, while shearing costs average $4-5 per sheep. For the majority of farms, it now costs more to shear sheep than the wool is worth.

Fine wool (merino) commands premium prices around $20/kg but represents a small fraction of NZ production. The industry is searching for new uses — insulation, composites, biodegradable products — but volumes remain challenging.

Near-term conditions are the best in years: record beef prices, strong lamb demand, lower interest rates, and reduced regulatory pressure from the new government. The 2025 Stock Number Survey showed signs of stabilization — sheep down only 1% vs sharp falls in prior years, beef up 4.4%.

The long-term picture is more uncertain. Ongoing land loss to forestry threatens the sector's productive base. Breeding ewe numbers continue to decline, limiting future lamb production. The government's goal to double exports by 2034 will be difficult to achieve if current trends continue.