Breeding ewe numbers in Scotland have fallen more than 700,000 to 3.5m over the last seven years - the situation is mirrored throughout the UK with total figures falling from 19.8m ewes to 15m in the last nine years.
Unfortunately, prices have also fallen, down around 3% compared with a year ago, despite the tightening of supplies. According to MLC figures, the average per capita consumption in Scotland is 4kg a year, compared with 10kg in Wales.
The industry is now warning hill farming cannot survive without subsidies.
According to Scottish Executive figures, during 2005, the average net farm income of a unit with a breeding flock in the less favoured areas, which covers 85% of the Scottish land mass, amounted to £8,400. Meanwhile, a typical farm received £25,000 in direct support.
The changes to the CAP and creation of the Single Farm Payment is likely to accelerate the reduction in sheep flocks, the sector has warned.