Total exports were forecast to reach $8.2 billion from $9.2b a year earlier.
Beef production was expected to return to 2014 levels as farmers started to rebuild dairy herds again and lamb production was expected to be down 3%.
Prices in both sectors were expected to fall this year as world supply expanded faster than demand.
A decline in mutton and wool demand in China was denting returns from that important market. Offsetting that to an extent was rising Chinese demand for beef, though prices were off slightly.
MPI expected China to become a reliable secondary market for NZ, following the key US market.
Beef and veal exports were forecast to be worth $2.59b for the June year, down from $3.095b last year; lamb was expected to fall to $2.23b from $2.57b, mutton to $370 million from $419m, wool to $670m from $761m and carpets and other wool products $170m, down from $195m.
The Government agency said beef production had been about 50,000 tonnes higher in each of the last two years, compared with typical figures, as a result of the record dairy cow culling.
With that expected to have run its course, beef production would naturally fall back to previous levels.
Strong beef prices had stabilised the herd at 3.6m in number at June 30 last year but with schedule prices expected to fall to about $4.70/kg this year from $5.39/kg last year, there would be less incentive to restock and total cattle numbers might resume their slow decline, it said.
Nearly half the NZ beef export supply went to the United States but with higher domestic production there, demand for imports had fallen.
Over time, Brazil was also expected to provide greater competition to NZ and Australian exports to the US, as well as in the Chinese market, though China might be able to accommodate increased competition.
Over the medium term, global demand for meat was expected to continue rising, especially in emerging markets, and should support demand for beef.
Over the next few years, MPI expected the NZ sheep population to stabilise at just over 28m, with 18.5m to 19m breeding ewes.
However, opening stock numbers were down this year because fewer lambs were retained from last year.
With lower production and prices this year, forecast sheep and beef farm revenues were expected to fall for a third straight year.
After lower production this year, stock numbers were expected to recover and stabilise from next year.
The MPI report referred to the impact of the falling value of the United Kingdom pound after the Brexit vote, increasing costs for UK importers. More than half of NZ lamb exports went to the UK and European Union market.
Mutton was more dependent on the Chinese market and had been affected by greater domestic production and falling prices there.
