Chief executive Grant Cuff said with sheep numbers declining around the world, the Invercargill co-operative was launching an extensive review on the possibility of supplying North American and European markets with South American lamb.
Alliance looked at a similar idea about a decade ago, but Mr Cuff said situations had changed.
Back then, South American lambs were lighter in weight, there were insufficient numbers and issues with disease and traceability.
South American farmers had since improved the quality of lambs they produced and addressed the disease and animal traceability issues which, together with falling sheep numbers, had encouraged Alliance to look more closely at whether lamb could be sourced elsewhere to fill supply gaps.
"New Zealand has looked at it before. It is all a matter of timing and priorities and we think the moment is right to have another look."
Mr Cuff said Alliance was still to decide if the lamb would be sold under its own brands but, initially, that was unlikely.
He would not say which countries Alliance was looking at but said two or three had European Union sheep meat quota, some of which had not been utilised.
Alliance's proposal was similar to Fonterra, which sourced dairy products from foreign producers to fill its supply shortages, but Mr Cuff stressed there was plenty of work still to be done on the proposal.
With shrinking sheep numbers in both New Zealand and Australia, sourcing stock was an issue for all meat processors.
New Zealand sheep numbers have fallen to a 50-year low, with this year's lamb kill expected to be six million fewer than last year due to drought and land-use change.
Mr Cuff said New Zealand companies had previously worked with their Australian partners in the Australia New Zealand Lamb Company to fill any void, but the Australian flock had shrunk to its smallest size since 1920.
Meat and Livestock Australia (MLA) reports that drought and the shift to cropping has seen the flock fall to 80 million this year, with forecasts it could fall to 76 million by 2011.
This year's lambing was expected to be poor, with predictions the lamb kill could be back 9% to 19.2 million and meat volumes 8% lower at 404,000 tonnes.
But MLA expects the flock to recover, weather permitting, as farmers cash in on brighter prospects for lamb and react to continued low wool prices, with lamb production expected to reach record levels of 458,000 tonnes by 2012.
Mr Cuff said sourcing Australian lamb was not an option, with 60% sold domestically and they tended to be larger than New Zealand lambs.
He expected the Australian industry to undergo some upheaval as Australian meat companies tended to own just one or two plants and there was a view many faced some rationalisation as they grappled with lower numbers.
