While profits for sheep and beef farms improved 10-fold last year, the Ministry of Agriculture says the outlook for the current season is not so rosy.
The information is part of the latest farm monitoring report issued by the ministry.
Prices for lamb, sheep and cattle improved during the 2008/09 season, but production was below normal levels for many parts of the country as a result of a year - and in some cases up to three years - of drought.
MAF says fertiliser applications are down to well below maintenance levels on most farms.
While production is expected to recover from the effects of the drought, natural resources team leader John Greer says farm gate prices are predicted to fall for all products because of the rising exchange rate and reduced demand in some markets.