The ratio of sheep to people has dropped below 5 to 1 - the lowest number since the 1950s.
Stats NZ has released its five-yearly Agricultural Production Census, which shows decreases in the national dairy herd and sheep flock.
Federated Farmers Meat and Wool Chairman Toby Williams told Kate Hawkesby the fall in numbers shouldn't have much of a direct impact on our exports.
"It'll make our product become more premium in the marketplace."
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