Measurements were made to determine the balance between photosynthesis, animal intake and the losses of matter in swards maintained by lenient continuous grazing by sheep at a leaf (lamina) area index of 3.0 and by hard continuous grazing at an LAI of 1.0. Gross photosynthetic uptake was greater in the leniently-grazed sward than in the hard-grazed sward. In both swards, a similar proportion of photosynthetic uptake was lost in respiration or by partition to non-harvestable parts. Shoot production under lenient grazing was also greater than under hard grazing. Despite the lower gross photosynthetic uptake in the hard-grazed sward, animal [sheep] intake in this sward was greater than in the leniently-grazed sward. This was because, in the hard-grazed sward, a far greater proportion of the shoot produced was harvested, a far smaller proportion remained unharvested to be lost to death. It is a major limitation to production under continuous grazing that the high gross photosynthetic uptake and high rate of shoot production seen in the leniently-grazed sward cannot be associated with a high efficiency of harvest and so give rise to high harvested yield. Maximum intake per hectare is achieved in a sward maintained at an LAI which is substantially below the optimum for photosynthesis.