More tough news for sheep meat farmers with prices for lamb expected to halve.
Beef + Lamb New Zealand's Economic Service Mid-Season Update predicts profit before tax dropping by 54 percent to $73,000.
That's roughly $85 per lamb, down from last season's $113 amount.
Beef + Lamb economic service executive Rob Davison says despite high lambing numbers last year, the drought in the North Island has hit lamb production hard.
He says last year's good results have been eroded, with profits now on par with early last decade after inflation.
Slowing demand for lamb worldwide is also starting to bite.
"Europe's debt crisis is far from being solved and there is almost no growth in the region. Meanwhile, there are concerns about economic prospects for the US, and China's economic growth has slowed to the lowest rate in a decade," he says.
But the prospects are slightly brighter for beef farmers. The report says while profits are expected to drop 8.8 percent, last year's drought in the United States is still saying a flow-on effect on beef supply.