"If you look at the sheepmeat industry as a whole and the gains that have been made in the last 20 years, a lot of these gains can be attributed to the fact that we have good representation, and are not the junior partner in some combined organistaion," Mr Groves said.

The National Farmers' Federation mandate to state farm bodies that budgets must achieve a break even or surplus by year end has caused a tightening in funding to national industry peak bodies.

But Mr Groves insists a retraction of financial support from state farmer bodies should not damage the ability of the Sheepmeat Council to stand alone as "considerable" work had been done to reduce reliance on these bodies.

"A few years back, yes, we were relying on state farmer organisations for a large percentage of revenue, but over time work has been done and this has been reduced."

He said investigative work had been done looking into the economic viability of a merger and "there were not the savings that people thought".

On Sheepmeat council funding, executive director of the Sheepmeat Council Ron Cullen said 62 per cent of its funding for 2009-10 would come from the Red Meat advisory council and state farmer organisations.

This amount was split 40pc red meat funded and 22 per cent state farmer, down from 35pc from state farmer members three years ago.

Managing director for Meat and Livestock Australia, David Palmer said this week that "there is obvious attraction to merging bodies and looking for efficiencies, but the industry needs to take a little care".

"Sheepmeat over the last 20 years has clearly come from being a by product of wool industry to a stand alone and prestigious industry," he said.

Mr Palmer said the "ideal mix" of an "utterly focused approach" to getting the lamb market and product right by the sheepmeat industry had caused significant gains in the industry