The service yesterday released its latest provisional half-year lamb slaughter figures and forecast that total lamb production was forecast to reach 19.3 million head for the present season.
That was 7.7% lower than the 2009-10 season and was less than the 19.5 million head forecast in the November 2010 Lamb Crop report.
However, tight global supplies of lamb meant higher lamb prices for sheep and beef prices, he said.
"This season's lamb prices have been strong and all indications are that they will remain so for some time to come, thanks to tight global prices," he said from Wellington.
The Otago-Southland secretary of the New Zealand Meat Workers Union, Gary Davis, said his members were facing one of the shortest seasons on record.
Two night shifts at separate plants had not started and were unlikely to staff. Those workers were facing redundancy.
Some chains did not start until well into January - about two months later than normal. Some chains were now being laid off, well ahead of other years, he said.
"That will happen quickly over the next two weeks. Our members are facing a very long off-season and it doesn't look much better for the future." The union had been working with the Ministry for Social Development to try to find jobs for meat workers finishing their seasons early, Mr Davis said.
Last year, because of the recession, not many of the union members found alternative seasonal jobs. But the aim was to find people two seasonal jobs to keep them coming back to both industries, he said.
Mr Davison said a combination of an appalling spring conditions last year, particularly in Otago and Southland, and dairy conversions, had meant lamb numbers had fallen sharply.
Mutton export volumes were well up. Based on the provisional half-year slaughter numbers, Mr Davison expected at least 4 million head of mutton to be processed - 9.9% more than last season.
Anecdotal comment suggested farmers were culling the bottom end of their flocks to take advantage of higher mutton prices. That could lift the mutton volume a further 5%, or 200,000.
In turn, that might mean more lambs kept as replacements, lowering the export lamb slaughter by a similar number, he said. It could be a year or more before lamb numbers consolidated.
Lamb prices for April averaged $116 a head, up 53% on last year's $76 a head for the same month.
Mutton prices for April averaged $97 a head, up 63% on April last year.
Mr Davison said the price increases followed from a period of low lamb prices for three years from 2006 to 2008 which depressed farm profitability and helped to underwrite the swing to convert prime sheep and beef farmland to dairy production.
"Farmers and processors need to note that the production figures are forecasts.
"The caveat on this is that dairy conversion rates for the spring of 2011 do not turn out to be higher than previously estimated," he said.
Prices
• Lamb prices for April averaged $116 a head, up 53% on last year's $76 a head for the same month.
• Mutton prices for April averaged $97 a head, up 63% on April last year.