Meat companies say they were prepared for fewer lambs to be available and the forecast confirmed earlier predictions that 20.3 million lambs would be available for slaughter this season.
Silver Fern Farms chief executive Keith Cooper said his company had already taken steps to align production capacity with lower stock numbers. The trend had been forecast and the result was not unexpected, he said.
International lamb prices were rising on the back of the lower lamb numbers and, depending on the climate, Mr Cooper said lamb weights should also be higher, which was what markets wanted.
Alliance Group chief executive Grant Cuff said the forecast lamb kill was not uncharted territory for the South Island.
"In the South Island we were back at similar levels three to four years ago," he said.
Mr Cuff was comfortable with the forecast kill, saying it followed several years of exceptionally high kills and would mean different plant use this season.
Federated Farmers meat and fibre chairman Bruce Wills said the decline equated to nine lambs a minute disappearing from New Zealand farms in the past year, a figure he said showed the desperate state of the meat sector.
Meat and Wool New Zealand's economic service director Rob Davison said drought and the growth of dairy had resulted in a 15% drop in the number of lambs born this season at 27.3 million. The number of lambs born per ewe this spring was also down.
In the South Island, lambing was down 3.1% to 120.7%, with 2.6 million fewer lambs than last year at 15.1 million.
Otago and Southland lamb numbers were back 1.3 million to 9.2 million, but part of the decline was due to a poor lambing on intensive Southland finishing country, where it was down 7% on last year.
The North Island was even harder hit, with the lambing back 7.3% at 105%, leaving a lamb crop 2.1 million lighter than last year at 12.2 million.
The region with the largest decrease in lamb numbers was drought-affected Northland-Waikato-Bay of Plenty, with a 25% drop to 3.1 million.
Marlborough-Canterbury had a 15% drop in ewe numbers, the biggest decline of any region.
"This was due to dairy expansion on to sheep and beef farmland, drought and continued low lamb prices last summer and autumn.
"This influenced farmers' decisions to replace sheep with increased crop areas."
Mr Davison said average carcass weights should be up 7.5% this season at 17.7kg but, with the lower numbers, overall lamb production was picked to fall 17.5% to 361,000 tonnes.
