The Victorian red meat sector is facing a 33 per cent reduction in processing capacity because of the restrictions imposed by the state government as it battles a second wave COVID-19 outbreak.

Mr Littleproud says processors in NSW and Queensland have the capacity to handle meat from Victoria.

"That will be a burden on the producer in terms of freight costs," Mr Littleproud told Sky News' Sunday Agenda program

"The demand for beef, not only here in Australia but around the world, (means) our producers are still making really good money."

However, the minister noted there aren't as many processors for sheep in Queensland and NSW, although there is capacity in South Australia.

Mr Littleproud also said the issues in Victoria may not necessarily result in consumers paying higher prices for beef and lamb.

"Lamb and beef prices are already high as a result of trying to rebuild the herd after the drought," Mr Littleproud said.

"The maturity of the processing sector will see that there will be downward pressure on prices."

On sheepmeat exports, Mr Littleproud said the sector had been able to bring its exports in line with New Zealand after a change in the definition of a lamb.

This means a lamb can stay in the paddock an extra 20 to 40 days longer, and still be defined as a lamb, and attract a higher price sale price.

Australian Associated Press