It is believed that sheep numbers may have fallen that much nationally - by nearly four million - with most of that, 3.5 million, in the South Island.
The Canterbury flock is believed to have fallen by 14% and Otago and Southland's flock by 8%.
It is predicted the number of lambs available for slaughter nationally next year would fall from 25.5 million this year to 22 million.
The final statistics are yet to be confirmed, but an indication of the extent of the decline is supported by lamb forecasts by Silver Fern Farms, which forecasts 2.2 million fewer lambs in the South Island next year and 1.5 million fewer in the North Island.
In the autumn of 2007, 8.1 million ewes in Otago-Southland went to the ram and 10.5 million lambs were tailed that spring.
In the rest of the South Island, six million ewes were mated and 7.5 million lambs tailed.
Based on the expected sheep decline, the Otago-Southland flock looks like falling by nearly two million and the rest of the South Island by 1.5 million.
Meat and Wool New Zealand earlier this year forecast a 1.4% drop in ewes in the year to July 1 2008 and a 3.6% decline in lambs.
But those forecasts appear have underestimated the flood of farmers exiting the sheep industry and converting to dairying or dairy support.
In the 2007 census, Statistics New Zealand noted a decrease in sheep numbers from 39.6 million in 2002 to 38.5 million, and the decline appears to have accelerated sharply in the past year.
The 2007 national dairy herd was 5.3 million cows, up 2% on the 5.2 million recorded in 2002.
Of that number, there were 4.2 million dairy milking cows and heifers, up 8% on 2002.
North Island numbers were steady at 2.9 million, while South Island numbers increased 31% since 2002, from 1 million to 1.3 million.
Dairy New Zealand economist Matthew Newman said dairy cow numbers were believed to have peaked in 2007 at four million, up 100,000 on a year earlier.
Lower cow numbers following drought in the dairying heartland of Waikato was expected to cancel out any increase in the herd this season, and he expected the national herd to remain at about four million.
