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The farm gate price of lamb rose in April as international markets started to reflect a drop in supply, Rabobank says.
Farm gate prices as at the first week of May were 13-17 per cent higher than the same time last year, sheep meat export volume in the
March quarter was 3.3 per cent higher compared to the same period last year at 139,000 tonnes and export value rose 5.3 per cent to $798 million.
Dunedin-based processor PPCS on Tuesday proposed closing its Oringi sheep and lamb processing facility in the North Island, which employs 466 people, as part of a restructuring programme.
The company said the proposed closure highlighted declining sheep numbers and increased capacity in the North Island.
Chief executive Keith Cooper said the co-operative did not see the decline in livestock numbers reversing to any degree in the short term.
"If there was to be a return in a substantive manner to sheep meat in the medium to longer term all our facilities have the ability if required to increase production levels," Cooper said.
The 2007 agricultural production census released yesterday by Statistics New Zealand showed the national sheep flock comprised 38.5 million animals in 2007, down from 39.6 million in 2002.
During the same period the dairy herd grew from 5.2 million to 5.3 million animals, with the number of milking cows and heifers up 8 per cent to 4.2 million.
PPCS expected there would be at least 2 million fewer lambs in the South Island next season, with North Island sheep numbers dropping by more than 500,000 during the next three years.
Processors Alliance Group and Affco, with eight and 10 plants respectively, were not planning any rationalisation.
Affco chief executive Stuart Weston said: "Affco's been through it's own right-sizing in the recent past anyway and we know how painful it is particularly for staff and the families and the community.
"I think it's important that the staff understand that it's not a decision about the quality of their work or effort. It's factors well outside their control."
