Federated Farmers say the effects of this year's drought could last for several years, with early estimates of its cost to the economy up to $2 billion.
The organisation says while there has been a remarkable comeback for pasture through winter and spring, many North Island sheep farmers have suffered heavy losses to stock and genetics.
Federated Farmers adverse events spokesperson Katie Milne says there could be upwards of three million fewer lambs this year.
Ms Milne says some farmers might take as long as five years to fully recover.
She says the potential cost to the economy shows how much it relies on agriculture.
Ms Milne says the drought has proved water storage is sorely needed in key farming areas, to help prevent a further big knock in any future droughts.