Meat and Wool New Zealand yesterday confirmed earlier reports in the Otago Daily Times that sheep numbers had fallen 4.3 million in the year to June 30, after taking a massive 11% hit.
The flock has more than halved from its peak of 70 million in 1982-83 and fallen by 10 million in the last 10 years.
Economic Service executive director Rob Davison said 60% of the 4.3 million decrease was due to dry conditions and 40% from farms converting to dairying due to negative sentiment about sheep meat prospects.
Mr Davison said 330 sheep and beef farms had converted to dairying for the coming season, up from 70 a year earlier.
"This is the second highest number of conversions on record, only surpassed by 360 in 1996-97."
He estimated the converted farms would average 595 cows per property, displacing 1.3 million sheep and beef stock units and increasing the South Island dairy herd by 170,000 cows to 1.8 million and the North Island by 150,000 to 3.8 million.
This latest sheep census would have a significant impact on the coming season's lamb kill, with Mr Davison predicting 20.3 million available for slaughter, 6 million or 23% fewer than last year.
The expected South Island kill this season was 11.9 million, back 20% or 3 million, and 8.4 million fewer in the North Island, a 26% drop.
South Island ewe numbers are down 11.7% and hogget numbers back 26.6% resulting in an overall 15.3% decline in sheep to 16.9 million.
The biggest drop was in Marlborough-Canterbury with an 18.2% decline, followed by Southland 13.6% and Otago 12.4%.
The North Island ewe flock has fallen 6.9% and hoggets by 7% resulting in a 6.9% decline in sheep numbers to 17.3 million.
The total number of ewes in-lamb as at June 30 was 23.6 million, a drop of 9.5% and the largest single decrease since 1991-92 when numbers fell 3.8 million or 9.4%.
Adding to the sorry state of the industry was the dry autumn which meant ewes were in light condition at tupping and conception throughout the country was lower than normal.
Hogget numbers have also been hit hard, falling 16.2% to 9.4 million.
Mr Davison said the main reason for the decline was negative sentiment about the profitability of the sheep industry, dry conditions throughout much of the country and alternative land use.
"The main competition for the finishing land came from dairy conversion, dairy support, cash cropping or turning grass into baleage to sell to drought-affected dairying operations."
The decline was in-line with predictions by meat company Silver Fern Farms and a reason why it closed sheep meat processing chains in Canterbury and Hawkes Bay and downsized a lamb-cutting plant near Mosgiel.
Mr Davison said beef cattle numbers were not immune, falling 3.2% to 4.25 million.
Much of the decrease was due to drought, with the large North Island herd falling 2.9% while land use change to dairying saw the South Island herd fall 4%.
Breeding cow numbers increased in Otago by 8.4% and Southland by 6% as farmers switched from sheep by retaining more heifers for breeding.
