Dartmoor Hill Pony Association (DHPA) said it had put forward the idea "reluctantly".
The group claims numbers have dropped from about 30,000 at the beginning of the century to just 1,500 in 2011.
The DHPA said if numbers continued to fall, the breed could lose its hardiness to survive on the moor.
It said demand had dropped for the ponies as pets because of the economic downturn.
The ponies were traditionally used for farming, postal deliveries and pulling carts.
Charlotte Faulkner, founder of the DHPA, said in a letter to South West Equine Protection (Swep): "It has taken years of considering reports and listening to the outcome of meetings to recognise and reluctantly accept that Dartmoor pony herders will only carry on keeping their herds if they have a sustainable market for them.
"We are in real danger of ponies disappearing from Dartmoor altogether."
Ms Faulkner said selling ponies for riding and driving would continue.
"The Dartmoor Hill Pony Association believes the meat trade should be (used) too," she said. "Strangely, having a meat trade should improve a pony's chances of finding a new home at sale."
Becky Treeby, of Swep, said: "Dartmoor hill ponies were there for a reason, for ecology purposes to keep grass on the moors down, and they have been there for thousands of years. People have never eaten them before. It is promoting over-breeding for profit."
You can see more on this story on Inside Out SW on BBC One, Monday 29 September, at 19:30 BST.
Correction 2 December 2014: This story has been amended to clarify that it refers to Dartmoor Hill ponies rather than Dartmoor ponies.
Dartmoor Hill ponies should be bred for human consumption to ensure their survival on the moor, says a pony group.