Prices of imported sheep meat remains much lower than domestic produce, because of the more effective management systems in place and the often larger-scale production in the main global markets.

In China, sheep meat suppliers are generally local herders who often run very small outfits, scattered rurally.

Changing consumer preferences helping producers

Despite the slight decline in sheep meat imports during the first six months, demand has been rising steadily in China, with a growing cross section of consumers seeing it as an alternative to chicken and pork.

"Sheep meat was always popular in the northern parts of China. But demand has now transcended to other regions also," said Michael Zhou, general manager of the supply chain division of Zhongmeilian Group, a platform that provides services to hotel and restaurant chains.

During the first six months, sheep meat imports fell 24 percent year-on-year to 130,800 tons, according to data provided by the Sheep Industry Association of China Animal Husbandry Association

The decline in imports from major sheep meat producers like Australia, New Zealand and Uruguay was mainly due to lower product prices.

Prices of imported sheep meat dropped from 25,000 yuan ($3,920) per ton to 22,000 yuan in the first half, the data showed.

Australia accounted for about 40 percent of China's sheep meat imports. But the shipments accounted for just 5 percent of the overall sheep meat consumption in China, according to data provided by Meat and Livestock Australia.

Though China is the world's largest sheep meat producer, output has been falling due to shrinking farmlands and lack of efficiency in sheep breeding and processing.

Yan Shuchun, chairman of China's largest sheep meat producer Meng Yang Group, said that Australian annual consumption of lamb is about 50 kilograms, while that figure is a mere 3 kg in China, leaving much room for growth.