The New Zealand merino wool industry is encouraging farmers to desist from a procedure where skin is chopped from around the tails of sheep due to international protest over the painful practice.
Animal rights groups have called for a ban on the procedure called mulesing with American pop star Pink also speaking out against it and supporting a boycott of Australian wool products.
Australian sheep farmers have commonly practised mulesing because of the fly problem on the continent.
It is less prevalent in New Zealand where about one-third of merino sheep farmers are understood to still practice mulesing.
John Brakenridge, chief executive of the New Zealand Merino Company, said farmers were increasingly shying away from mulesing due to market pressure.
Some of the wool industry brand partners had encouraged the farmers to stop with many complying in the last year, he said.
In Australia, wool industry officials say they want alternatives to mulesing found by 2010.
The wrinkly skin of merinos, like New Zealand's famous woolly sheep Shrek, collects urine and moisture which attracts flies that lay eggs in the folds of skin.
The hatched maggots can eat the sheep alive and in order to prevent such flystrike strips of skin and flesh are sliced off the backs of lambs legs and around their tails to create smooth skin.
New Zealand animal advocacy group Safe says the New Zealand sheep population of about 39 million includes two million merino.
Safe campaign director Hans Kriek said he was told by the wool industry two years ago that about half those merino sheep were mulesed.
Mr Kriek, a former animal welfare inspector, said it was a painful procedure which left the lambs very sore, and the wound could take up to a month to heal. He said New Zealand's national welfare advisory committee was to include mulesing in its code of painful husbandry practices.
Mr Kriek said if that did not include a prohibition on mulesing then Safe would actively campaign to have it banned.