Farming is often a numbers game driven by supply and demand and this season is shaping up as a juggling act, with sheep farmers battling to buy in replacement stock in a depleted marketplace.

Beef + Lamb NZ surveys reveal the national flock will be down about 700,000 lambs this year as the number of breeding ewes continues to fall.

Ewe numbers had already been on a downward trend as dairy continued to impact by competing for good grazeable country. And sheep farmers were also now facing another enemy from a somewhat unexpected quarter.

The increase in beekeeping, particularly in hill country regions to produce high-priced manuka honey, was encroaching on what had been traditional sheep country.


Combine these factors with the huge outbreak of facial eczema in the central North Island, drought in Canterbury and Marlborough, storms at lambing last season and fears of dry El Nino conditions on the East Coast and we have a recipe for disaster.

Variable scanning results were also an issue, with facial eczema in some North Island areas resulting in more empty ewes.

Though drought had affected a large area of the South Island, scan results were generally up with or better than last year, largely because of excellent conditions in the southern regions.

Glen Baker, from Wanganui Veterinary Services, mainly blames the impact of facial eczema in summer for lamb numbers being down 7-10per cent. Large numbers of stock, including ewes, were slaughtered after succumbing to the fungal disease.

PGG Wrightson Wanganui livestock agent Darryl Malcolm said the price of in-lamb ewes had soared as farmers tried valiantly to find replacement numbers.

"There are several factors at work starting with ewe numbers trending down because of dairying - that's been happening for a few years now.

Then there was the dairy guys buying up land sheep had traditionally been farmed on. Facial eczema this year has had a massive impact around here and then beekeeping is also beginning to encroach," Mr Malcolm said.

Processing companies were also hesitant about offering contracts simply because of the fall in numbers.


However, lower stocking rates in drought-hit Canterbury and Marlborough contributed to improved ewe condition, according to Beef + Lamb NZ surveys.

B+LNZ estimated there were 28.25 million sheep on June 30, a 3 per cent fall from last year's 29.12m.

The season's lamb crop was estimated to be 23.33m, from 24.03m last year.

Breeding ewe numbers were 18.48m, 3 per cent down on last year's 19.07m. Ewe hogget estimates 8.93m, from 8.2m.

The North Island's east coast remained the biggest sheep farming region with an estimated 6.94m (7.31m last year) ahead of Canterbury-Marlborough at 5.72m (5.9m).

Year-on-year, South Island sheep numbers fell to 14.31m from 14.6m and North Island numbers fell to 13.93m from 14.5m.

Decreased hogget numbers were a feature on the east coast, down by 11per cent on a year earlier, partly due to storms during 2015 lambing and fears of dry El Nino conditions.

Year-on-year, South Island sheep numbers fell to 14.31m from 14.6m and North Island numbers fell to 13.93m from 14.5m.

The east coast has more than half the North Island's sheep.

Over the decade from 2007, total sheep numbers fell from 38.46m, a drop of 29 per cent.

Breeding ewe numbers fell 26.5per cent from 26.06m.

B+LNZ's lower lamb estimate was based on the reduced breeding ewe tally and no significant increase in the number of hoggets being mated.