New statistics from the Ministry of Agriculture have confirmed the dire state of the sheep and beef sector.
MAF's latest farm monitoring report shows there has been a significant fall in farm profits over the past year. It predicts a gloomy outlook for the current season.
MAF says farm surpluses for reinvestment fell by more than $11,000 in the 2009/10 season and cash surplus eroded by $15,000 to under $7000.
The report says this was mainly due to prices for lamb falling, as well as the effects of up to three years of drought in some farming regions, and rising production costs.
MAF regional team leader John Greer of Christchurch says sheep and beef farmers are only just managing to make ends meet.
He says the report emphasises the need for a sector strategy, so that long-term profitability for sheep and beef farms can be restored.
Entire primary sector affected - Carter
Agriculture Minister David Carter says low profitability is affecting the entire primary sector.
He told a conference of Horticulture New Zealand in Auckland that growers and farmers alike are suffering from low prices and rising production costs.
Mr Carter said the primary sector needs to focus on getting premium prices for its products, as it is no longer a low-cost producer.
However, he said that despite the pressures the horticulture industry is under, growers appear to be quite optimistic about their future.