The sheep and beef sector must focus on where it is heading long-term, Primary Industries Minister David Carter says.
In his address to Beef and Lamb New Zealand's future farming conference and annual meeting in Hawkes Bay, Mr Carter said sheep and beef farmers were living in "interesting times".
The 2011-12 season was a bumper one for most farmers and, despite the recent sharp decline in sheep meat prices, it was the best he had seen in his farming career.
Farmer confidence was high as the industry continued to reduce debt and undertake overdue maintenance on farms. But the long-term issues facing the sector must not be forgotten, he said.
In the last 20 years the total number of sheep had dropped by more than 40% as land for beef and sheep had been converted, mainly to dairy.
"This conversion has obviously been because farmers foresaw higher profits, and therefore confidence, in dairy rather than sheep.
"We all know that sustained profitaiblity won't come from relying solely on swings in the commodity market. Nor will it come from individuals and companies acting in isolation."
The sector must focus on where it was heading long-term and, with prices allowing the sector to "pick itself up", there was no better time to look ahead, he said.
By 2050, the world would have at least nine billion mouths to feed and the international appetite for high-quality product would continue to grow.
The overarching challenge for New Zealand was to position itself, and maintain its reputation, as a quality food producer.
Water was possibly the biggest factor in growing New Zealand's economy - "we have plenty of it, but as we know it's not always in the right place at the right time" - and he wanted to see more areas reliably irrigated.
Mr Carter also wanted to see more innovation in the primary sector.
The Primary Growth Partnership, a Government-industry initiative, had so far pledged more than half a billion dollars towards "cutting-edge" primary sector innovation.
Farmers could rightfully expect a red meat sector showing greater unity and co-operation than had been seen in the past.
There had been progress and the red meat sector strategy and subsequent strategy co-ordination group was a good example of collaboration between industry and government.
The strategy's recommendations were clear - behavioural change and transformation was essential, he said.